Master like-kind exchange (LKE) programs are a specific type of 1031 exchange that are most beneficial to companies that rent or lease vehicles and equipment. Contact the qualified intermediaries at Commercial Partners Exchange Company today for help facilitating your master LKE program exchange – 612.643.1031.

What is a Master Like-Kind Exchange (LKE)?

A master like-kind exchange is a little bit different than the standard forward or reverse 1031 exchange. In a typical 1031 exchange of real estate or personal property, you can avoid the capital gains taxes on the sale of property by moving your sales proceeds into new like-kind property. However, some types of property – such as leased cars and trucks – have a relatively low gain when sold. So it doesn’t always make sense to structure these transactions as traditional 1031 exchanges. But there is a way to use the 1031 exchange tax deferral in this type of situation – with a master like-kind exchange.

How a Master LKE Works

Here’s how a master exchange works. Let’s say you are an auto rental company. Every few years you want to sell some of your fleet. In a master LKE program exchange, you would take those older vehicles and match them up with newer vehicles (like-kind property). As long as you abide by the 45 day and 180 day identification periods, this will allow you to defer the gains on the sale of these vehicles and keep that money working for your business.

Here are some of the types of businesses that can benefit from the tax savings of a master like-kind exchange program:

  • Car & truck rental companies
  • Construction rental companies
  • Equipment lessors
  • School bus companies

The biggest benefit of a master exchange is that you get to keep the time value of your money working within your business, rather than paying it out in taxes.

Minnesota Master 1031 Exchange Services

Commercial Partners Exchange Company is one of the leading providers of 1031 Exchange services in the Twin Cities and greater Minnesota. If you own or operate a vehicle rental or leasing company, contact us today at our Minneapolis office to see how a Master Like-Kind exchange program can benefit your business – 612.643.1031.