Question

Under Section _______ of the Internal Revenue Code, an investor in real property can sell that property, reinvest the proceeds in a "like-kind" property, and defer paying capital gains taxes.

a) Section 401(k)
b) Section 1031
c) Section 529
d) Section 746

Answer 1

Section 1031 of the Internal Revenue Code allows investors to defer capital gains taxes by reinvesting proceeds from sold property into 'like-kind' property. b) Section 1031

Step-by-step explanation:

Under Section 1031 of the Internal Revenue Code, an investor in real property can sell that property, reinvest the proceeds in a "like-kind" property, and defer paying capital gains taxes.

This section is commonly referred to as a 1031 exchange, and it allows for the deferral of capital gains taxes provided that the properties involved are of like-kind, used for business or investment purposes, and the proceeds from the sale are reinvested in a similar property within a specified time frame.