2 for 4 Like Kind exchange

Forum|Forum|3 years ago
December 29, 2022
2 replies
11 views

Like Kind Exchange Wizard only handles one received asset. Client exchanged two apartment complexes with hundreds of depreciable assets for four commercial buildings. $11M sales price, $3M old loans, $17M new buildings, $9M new loans. Totally qualifies for an exchange. How many 8824s do I need to prepare? Like-Kind Exchange Wizard is no help. Do I exchange each old building for two new buildings? How do I enter multiple properties received for one given up? I'm glad I'm starting on this early. I'd hate to have this on my desk on April 14th. Help!

Lacerte Tax

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sjrcpa

Level 15

Was it all done as one exchange? Or was it two?

The more I know the more I don’t know.

G

GeneInSanDiegoAuthor

Level 2

One exchange. Two for four.

I played around already doing two exchanges each one for fwo and have numerous questions.

1) Can I complete the 8824 manually in Lacerte?

2) Can i use the numbers as if client did two separate 1 for 2 exchanges and add them together on the manual 8824?

3) Do I take the depreciable assets created by the Wizard and then reduce them for land and create new deprecation items for the land? I'd have to take the two assets and as a minimum convert to four.

George4Tacks

Level 15

https://proconnect.intuit.com/support/en-us/help-article/form-8824/using-like-kind-exchange-wizard-multiple-asset/L7QYINFyq_US_en_US?uid=lcewob8q does state that Lacerte is not really set up to do this type of transaction.

You can do this either 2 for 4 or as a single 1031. You will need to do an attachment to the 8824. From the instructions for 8824

"Multiple exchanges. If you made more
than one like-kind exchange, you can file a
summary on one Form 8824 and attach your
own statement showing all the information
requested on Form 8824 for each exchange.
Include your name and identifying number at
the top of each page of the statement. On
the summary Form 8824, enter only your
name and identifying number, “Summary” on
line 1, the total recognized gain from all
exchanges on line 23, and the total basis of
all like-kind property received on line 25."

I usually create my own spreadsheet to allocate land and improvements for each property.

I think you can leave what you original did as a correct start. You will need to fiddle with the wording to have the 8824 say "SEE ATTACHED" and then use the Notes to create an attachment giving all the details. You will have to manually set up all the parts of your new assets.

Answers are easy. Questions are hard!

M

Mark Leggio

Level 2

Form 8824 allows to group the multiple exchanges into one exchange on the Form.

Then you generate an excel schedule to support those numbers and show each exchange separately. The excel schedule can then be attached as a PDF to the returns. You might need to two excel schedules if you have Federal and State differences. I can give you an example if you call me 916-534-7441

Mark

G

GeneInSanDiegoAuthor

Level 2

So, with the 2 to 4 exchange, if I do two 1 to 2 exchanges I'm left with one asset for each exchange. I need to break that into two assets going forward. Do I just allocated it based on the size of the two buildings acquired? What about all the assets carried forward that are still being depreciated. Do I allocate those the same way I allocate the asset Lacerte generates coming out of the exchange? I'm really challenged on this transaction.

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