26 U.S.C. § 1031: Exchange of real property held for productive use or investment

No gain or loss shall be recognized on the exchange of real property held for productive use in a trade or business or for investment if such real property is exchanged solely for real property of like kind which is to be held either for productive use in a trade or business or for investment. This subsection shall not apply to any exchange of real property held primarily for sale. such property is not identified as property to be received in the exchange on or before the day which is 45 days after the date on which the taxpayer transfers the property relinquished in the exchange, or the day which is 180 days after the date on which the taxpayer transfers the property relinquished in the exchange, or the due date (determined with regard to extension) for the transferor’s return of the tax imposed by this chapter for the taxable year in which the transfer of the relinquished property occurs. If an exchange would be within the provisions of subsection (a), of section 1035(a), of section 1036(a), or of section 1037(a), if it were not for the fact that the property received in exchange consists not only of property permitted by such provisions to be received without the recognition of gain, but also of other property or money, then the gain, if any, to the recipient shall be recognized, but in an amount not in excess of the sum of such money and the fair market value of such other property. If an exchange would be within the provisions of subsection (a), of section 1035(a), of section 1036(a), or of section 1037(a), if it were not for the fact that the property received in exchange consists not only of property permitted by such provisions to be received without the recognition of gain or loss, but also of other property or money, then no loss from the exchange shall be recognized. If property was acquired on an exchange described in this section, section 1035(a), section 1036(a), or section 1037(a), then the basis shall be the same as that of the property exchanged, decreased in the amount of any money received by the taxpayer and increased in the amount of gain or decreased in the amount of loss to the taxpayer that was recognized on such exchange. If the property so acquired consisted in part of the type of property permitted by this section, section 1035(a), section 1036(a), or section 1037(a), to be received without the recognition of gain or loss, and in part of other property, the basis provided in this subsection shall be allocated between the properties (other than money) received, and for the purpose of the allocation there shall be assigned to such other property an amount equivalent to its fair market value at the date of the exchange. For purposes of this section, section 1035(a), and section 1036(a), where as part of the consideration to the taxpayer another party to the exchange assumed (as determined under section 357(d)) a liability of the taxpayer, such assumption shall be considered as money received by the taxpayer on the exchange. For purposes of this section, an interest in a partnership which has in effect a valid election under section 761(a) to be excluded from the application of all of subchapter K shall be treated as an interest in each of the assets of such partnership and not as an interest in a partnership. a taxpayer exchanges property with a related person, there is nonrecognition of gain or loss to the taxpayer under this section with respect to the exchange of such property (determined without regard to this subsection), and the related person disposes of such property, or the taxpayer disposes of the property received in the exchange from the related person which was of like kind to the property transferred by the taxpayer, after the earlier of the death of the taxpayer or the death of the related person, in a compulsory or involuntary conversion (within the meaning of section 1033) if the exchange occurred before the threat or imminence of such conversion, or with respect to which it is established to the satisfaction of the Secretary that neither the exchange nor such disposition had as one of its principal purposes the avoidance of Federal income tax. For purposes of this subsection, the term “related person” means any person bearing a relationship to the taxpayer described in section 267(b) or 707(b)(1). This section shall not apply to any exchange which is part of a transaction (or series of transactions) structured to avoid the purposes of this subsection. If paragraph (2) applies to any property for any period, the running of the period set forth in subsection (f)(1)(C) with respect to such property shall be suspended during such period. the holding of a put with respect to such property, the holding by another person of a right to acquire such property, or a short sale or any other transaction. Real property located in the United States and real property located outside the United States are not property of a like kind. Except as otherwise provided in this subsection, the amendments made by this section [amending this section] shall apply to exchanges completed after December 31, 2017 . the property disposed of by the taxpayer in the exchange is disposed of on or before December 31, 2017 , or the property received by the taxpayer in the exchange is received on or before December 31, 2017 .” The amendment made by this section [amending this section] shall apply to transfers after June 8, 1997 , in taxable years ending after such date. it provides for a sale in lieu of an exchange, or the property to be acquired as replacement property was not identified under such contract before June 9, 1997 .” Except as provided in paragraph (2), the amendments made by this section [amending this section] shall apply to transfers after July 10, 1989 , in taxable years ending after such date. The amendments made by this section shall not apply to any transfer pursuant to a written binding contract in effect on July 10, 1989 , and at all times thereafter before the transfer.” Except as otherwise provided in this subsection, the amendment made by subsection (a) [amending this section] shall apply to transfers made after the date of the enactment of this Act [ July 18, 1984 ] in taxable years ending after such date. Paragraph (2)(D) of section 1031(a) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as amended by subsection (a)) shall not apply in the case of any exchange pursuant to a binding contract in effect on March 1, 1984 , and at all times thereafter before the exchange. to transfers after the date of the enactment of this Act [ July 18, 1984 ], and to transfers on or before such date of enactment if the property to be received in the exchange is not received before January 1, 1987 . by substituting ‘ January 1, 1989 ’ for ‘ January 1, 1987 ’, and by substituting ‘ January 1, 1990 ’ for ‘ January 1, 1988 ’. Paragraph (2)(D) of section 1031(a) of the Internal Revenue Code of 1986 (as amended by subsection (a)) shall not apply to any exchange of an interest as general partner pursuant to a plan of reorganization of ownership interest under a contract which took effect on March 29, 1984 , and which was executed on or before March 31, 1984 , but only if all the exchanges contemplated by the reorganization plan are completed on or before December 31, 1984 .”