What kinds of property do not qualify under the like-kind provisions?
The property exchanged may not qualify for § 1031 treatment for five reasons. First, the property involved in the exchange (i.e., transferred and received) must be business use or investment property. Thus, personal use property does not qualify. In addition, the types of property contained in the language of § 1031(a)(2) do not qualify as business use or investment property (i.e., inventory, partnership interests, stocks, bonds, notes, chooses in action, certificates of trust or beneficial interest, or other securities or evidences of indebtedness or interest). Second, one kind or class of property may not be exchanged for a different kind or class (i.e., real property for personal property or vice versa). Third, real property located in the United States exchanged for foreign real property (and vice versa) does not qualify as like-kind property. Fourth, livestock of different sexes do not qualify as like-kind property. Fifth, depreciable tangible personal property held for productive use in a business is like-kind property only if the exchanged properties are within the same general business asset class or the same product class.
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