Which of the following exchanges of property are like-kind exchanges?
I.Convenience store owner trades several cases of potato chips for a cash register.
II.A completely rented apartment building traded for a parts supply warehouse to use in business.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

Which of the following exchanges of property are like-kind exchanges?
I.Convenience store owner trades several cases of potato chips for a cash register.
II.A completely rented apartment building traded for a parts supply warehouse to use in business.
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A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

Only statement II is correct because like-kind exchanges typically involve properties of a similar nature or character, even if they differ in grade or quality. Trading a rented apartment building for a warehouse used in business qualifies as a like-kind exchange under IRS rules, as both are investment or business properties. Trading cases of potato chips for a cash register does not qualify as a like-kind exchange because they are not similar in nature or character; one is inventory while the other is business equipment.

Which of the Following Exchanges of Property Are Like-Kind Exchanges