32. What is a partially tax-deferred exchange?

Partially tax-deferred exchanges are transactions in which some portion of the realized gain is recognized and some is not (i.e., you will pay some of the taxes due upon sale, but not all). Some examples of such exchanges are:

  • Exchanges which are a combination of the I.R.C. Section 1031 and an installment sale, when the "paper" is received by the exchanger

  • Exchanges involving replacement property which is compromised of business or investment property and personal property. You can arrange fully tax-deferred treatment on these exchanges if you do a multi-asset exchange, covering both the real and personal property

  • Exchanges where a portion of the gain is taken in cash or other "boot" property, and the balance of the gain is invested in qualifying replacement property.

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