The not true statement is that a loss is always recognized if the taxpayer transfers non-like-kind personal-use property. The taxpayer can defer the recognition of gain or loss on the exchange of like-kind property. The like-kind exchange must be for business or investment property.
The not true statement regarding like-kind exchanges is that a loss is always recognized if the taxpayer transfers non-like-kind personal-use property.
1) The taxpayer can defer the recognition of gain or loss on the exchange of like-kind property. This means that they don't have to report any gain or loss on their tax return at the time of the exchange.
2) The like-kind exchange must be for business or investment property. This means that personal-use property, such as a primary residence or a vacation home, does not qualify for a like-kind exchange.
3) The taxpayer must identify the replacement property within 45 days of transferring the relinquished property. This is called the identification period, and it is important for the taxpayer to notify the other party involved in the exchange about the property they intend to acquire.
4) The taxpayer must complete the exchange within 180 days of transferring the relinquished property. This is called the exchange period, and it is the timeframe within which the replacement property must be received.