1031 Exchange and Replacement Property Quiz
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Questions and Answers

What is a 1031 exchange?

  • Transferring property used in business or held for investment and later receiving cash
  • Transferring property used in business or held for investment and later receiving like-kind replacement property (correct)
  • Transferring property used for personal use and receiving like-kind replacement property
  • Transferring property used for personal use and receiving cash

    • What is the difference between a simultaneous exchange and a 1031 exchange?

  • A simultaneous exchange occurs at the same time, while a 1031 exchange does not (correct)
  • A 1031 exchange occurs at the same time, while a simultaneous exchange does not
  • There is no difference between the two
  • A simultaneous exchange involves transferring property used for personal use, while a 1031 exchange involves transferring property used in business or held for investment

    • What happens if an exchanger receives money or property that is not like-kind in a 1031 exchange?

  • The exchanger is not affected in any way
  • Immediate gain or loss on the transaction (correct)
  • The exchange facilitator performs several key functions to make the overall exchange eligible for the same tax benefits
  • The exchanger is disqualified from 1031 treatment

    • What is the key function of an exchange facilitator in a 1031 exchange?

    <p>To prevent active or constructive receipt that would disqualify the transactions from 1031 treatment</p> Signup and view all the answers

    What is the main advantage of a 1031 exchange over a simultaneous exchange?

    <p>It allows for greater flexibility</p> Signup and view all the answers

    What happens if an exchanger receives money or property that is not like-kind in a 1031 exchange?

    <p>The transaction is immediately disqualified from 1031 treatment</p> Signup and view all the answers

    What is the main advantage of a 1031 exchange over a simultaneous exchange?

    <p>A 1031 exchange allows for a greater amount of flexibility</p> Signup and view all the answers

    What happens if an exchanger receives money or other property that is not like-kind in a 1031 exchange?

    <p>The exchanger will experience an immediate gain or loss on the transaction</p> Signup and view all the answers

    What is the role of a qualified intermediary in a 1031 exchange?

    <p>To prevent the exchanger from receiving non-like-kind property</p> Signup and view all the answers

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