1031 Like-Kind Exchange Program Expertise

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1031 Like-Kind Exchange (LKE) Program expertise is dependent primarily upon the application provider and secondarily on the qualified intermediary. A well received LKE program is provided by PricewaterhouseCoopers LKE application.

LKE Program Candidate

A LKE program is for individuals and companies that own 100 or more depreciable tangible personal property assets who:

1. Routinely sell and replace with like kind for depreciable tangible personal property;
2. Annually incur a six to seven figure tax on gains from the sale and recaptured deprecation of the assets sold.

Why should you or your company be interested in a LKE program?  If working capital is being used to pay taxes when those same dollars could be used as additional working capital for new or existing projects, why borrow when it is possible to self finance?

Revenue Procedure 2003-39

Just as in a one off 1031 exchange of real property, there is a benefit to defer the federal, (state capital gains tax where applicable) and recaptured depreciation tax aggregating to potential a 40% tax when replacing with real property of equal or greater value. Revenue Procedure 2003-39 is the application of the 1031 code regulating depreciable tangible personal property 1031 exchanges.

LKE Applications

1031 LKE expertise and application are applicable to:

1. The Wine Connoisseur who routinely sells and replaces their wine with wine or like kind or class alcoholic beverage.
2. Collectors who routinely sell and replace their artwork, coins, stamps, gems, metals with an asset of like kind or like class.
3. The Car, Truck, Construction, Technology, Medical, Equipment Leasing Company or manufacturer who own their assets and replace with a like kind asset within their 3, 5 and 7 year depreciable life.
4. The Service Company with 100 or more owned depreciable tangible assets and routinely replaces their equipment, cars, and trucks within their 3, 5, and 7 year depreciable lives with new like kind and like class equipment.

The PricewaterhouseCoopers LKE application and consultants have successfully implemented for banks, leasing companies and car, truck and equipment companies deferring millions of taxable gains. Does your company routinely replace personal property with similar personal property? If so, give us a call to discuss whether a LKE Program would benefit you.