Transfer of Property, 8% of the examination
Section 1031 exchange
A deferral of capital gain tax when investment or business real property is exchanged for like-kind real property.
It defers gain rather than eliminating it, and basis generally carries into the replacement property. The taxpayer must identify replacement property within 45 days and receive it by the earlier of 180 days or the due date, including extensions, of the return for the transfer year. For federal exchanges after 2017, section 1031 applies only to real property. Cash or other non-like-kind property received can produce recognized gain.
Test the distinction
A relevant question from Transfer of Property, selected because its facts or explanation use this concept.
What does a Section 1031 exchange permit?
Written to DRE's published topic list. Not a real examination question, since reproducing those is a misdemeanor under B&P Code section 123.
Primary sources
Use these authorities when a course summary, forum answer, or older flashcard conflicts with the current California rule.