Terry exchanges real estate (acquired on August 25,2008)held for investment for other real estate to be held for investment on September 1,2014.None of the realized gain of $10,000 is recognized,and Terry's adjusted basis for the new real estate is a carryover basis of $80,000.Consequently,Terry's holding period for the new real estate begins on August 25,2008.

Question

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There usually is a carryover holding period for the like-kind exchange property received.For this carryover holding period rule to apply in the case of like-kind exchanges after March 1,1954,the like­kind property surrendered must have been either a capital asset or § 1231 property.Therefore,Terry's holding period begins on August 25,2008.

Terry Exchanges Real Estate (Acquired on August 25,2008)held for Investment