Final answer:
Both improved and unimproved real estate qualify for like-kind exchanges if they are held for use in a trade or business or for investment and are located in the US. The fair market value affects deferred gains or recognized losses but not the qualification for exchange. The correct answer to the question is (a) All real estate exchanges qualify.
Step-by-step explanation:
The question pertains to the rules surrounding like-kind exchanges in real estate, a concept used in tax deferral strategies under the Internal Revenue Code (IRC). When considering if property qualifies for a like-kind exchange, it is not significant whether the real estate is improved or unimproved. According to the IRC, both improved and unimproved real estate can be exchanged as long as the properties are held for productive use in a trade or business, or for investment, and are located in the United States.
The correct answer to the question is therefore (a) All real estate exchanges qualify, assuming that both properties meet the aforementioned conditions for a like-kind exchange. The fair market value is relevant in determining the amount of deferred gain or recognized loss, but it does not determine whether the property qualifies for like-kind exchange treatment.