Like-kind Exchange - Simultaneous Three-Party Like-Kind Exchanges

Simultaneous Three-Party Like-Kind Exchanges

In many cases, two parties are unable to complete a like-kind exchange alone. For instance, one party may not wish to receive like-kind property or may wish to recognize loss on property that has declined in value. The two parties may involve a third party willing to pay cash (perhaps because the new property has a value less than the old property’s basis, or because the taxpayer’s desire for cash exceeds the desire to minimize liability for federal income taxes). When a third party willing to pay cash is involved, however, Revenue Ruling 77-297 indicates that non-recognition will apply if the taxpayer acquires the new property solely for the purpose of exchanging it with property of a like-kind.