Personal Property

Can You 1031 Exchange Livestock of Different Sexes?

Livestock 1031 Exchange

Livestock that is held for use in one's stock or trade may be exchanged with a 1031 transaction. However, there are many rules and regulations that govern such an exchange. In this article, we are going to offer a few tips to keep in mind when exchanging livestock under section 1031. In particular, we will be discussing the rule surrounding the exchange of livestock of different sexes.

Livestock Held for Sale

Section 1031(e) provides that livestock of different sexes are not property of like kind. Livestock held “primarily for sale” in the ordinary course of business cannot be subject to 1031 treatment because this kind of property (“inventory” or one’s stock in trade or other property held primarily for sale) is categorically excluded under Section 1031 (a)(2)(A).  Stock in trade or other property held primarily for sale can’t be exchanged under 1031.

Same-Sex Livestock

Same-sex livestock not held for regular sale (such as breeding stock) may be exchanged if they are like kind. Under the current regulations, there is no clear guidance as to what constitutes like kind for livestock. However, experts have argued that a grade beef cow is probably like kind to a purebred registered beef cow because they differ only in grade or quality. Conversely, a dairy cow is probably not like kind to a beef cow because dairy and beef cows are entirely different types of livestock.

  • 1031 Hotline: If you have questions about 1031 exchanges of livestock, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

© 2017 Copyright Jeffrey R. Peterson All Rights Reserved

3 Common Types of Personal Property Exchanges

Airplane Personal Property Exchange

1031 exchanges are most often used to defer capital gains taxes on the sale of real estate, but many people are unaware that section 1031 can also apply to items of personal property. When done correctly, you can defer your taxes on the sale of your personal property and keep your money compounding and building wealth in a continued investment. In this article, we are going to talk about three of the most common types of personal property exchanges under IRC section 1031.

Aircraft Exchanges

Airplanes, helicopters, and other aircraft can be exchanged under section 1031. Remember that 1031 exchanges only apply to property that is held for investment or business purposes. That means an airplane used primarily for your own personal use would not qualify.

Business Equipment Exchanges

Are you a business owner looking to upgrade your business equipment? A 1031 exchange allows you to sell that old business equipment and upgrade to newer, better equipment for your business. Best of all – you get to defer your capital gains taxes on the sale.

Coins & Precious Metals Exchanges

Numismatic coins, buillion coins, and other precious metals can be exchanged under section 1031. The like-kind requirement is quite strict in this area, so you need to make sure you are exchanging like-kind for like-kind.

Remember the Rules

With any 1031 exchange, it’s important to remember the rules that need to be satisfied in order to complete a successful exchange. Personal property exchanges are often more complex than real estate exchanges because the like-kind requirement is much narrower when it comes to personal property. With real estate, you can exchange most real estate for most other real estate. When it comes to personal property you want to make sure that you’re exchanging within the same general asset class. So you can exchange an airplane for another airplane, but not for business equipment. It’s important to involve a qualified intermediary early in the process to avoid any potential pitfalls.

  • 1031 Hotline: If you have questions about the different types of personal property exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

© 2017 Copyright Jeffrey R. Peterson All Rights Reserved

Tips to Remember when 1031 Exchanging Coins & Precious Metals

Gold Bullion Coins

Personal property exchanges can be trickier than typical real estate 1031 exchanges because of the narrowness of the like-kind requirement. That goes doubly for exchanges of coins and precious metals. In this article, we are going to discuss a few things to keep in mind when 1031 exchanging coins and other precious metals.

Numismatic vs. Bullion Coins

There are two basic types of coins when it comes to 1031 exchanges:

  1. Numismatic Coins. These are coins whose value is judged by historical or artistic factors, rather than weight alone.
  2. Bullion Coins. These coins are valued solely by their physical weight or content.

These are hard-lined categories when it comes to 1031 exchanges. You can exchange numismatic coins for numismatic coins, and bullion coins for bullion coins, but not numismatic coins for bullion coins.

Like-Kind Coins & Precious Metals

The biggest concern when exchanging coins and precious metals is the like-kind requirement. Personal property exchanges have a very narrow definition of like-kind (compared to real estate exchanges, which have a very broad definition). To be safe, you want to make sure that you are exchanging out of and into coins of the same metal type – i.e. gold bullion coins for gold bullion coins.

These are a few examples of exchanges that would not be considered like-kind:

  • Currency. You cannot exchange your coins for currency in a 1031 exchange.
  • Different Metal Types. You cannot exchange coins of different metal types.
  • Other Real or Personal Property. You cannot exchange coins for other items for real or personal property.

Numismatic Coin Exchanges

There is some gray area when it comes to numismatic coin exchanges. Specifically, whether or not it’s viable to exchange gold numismatic coins for silver numismatic coins. There are arguments on both sides of this issue. It’s important to talk to a qualified intermediary for advice about your personal property exchange.

  • 1031 Hotline: If you have questions about 1031 exchanges of coins and precious metals, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

© 2017 Copyright Jeffrey R. Peterson All Rights Reserved