1031 exchange properties include a variety of equipment and
assets. Tax deferred exchanges apply to personal property held
for the production of income or in a business such as a hospital, medical office, rental company, and manufacturer.
The 1031 rules governing personal property are more restrictive. Personal property replaced in a 1031 property exchange can be repeatedly replaced and recaptured depreciation deferred. For example, a car must be replaced with a car, or a generator must be replaced with a generator. Like kind personal property must be replaced with the same like kind or class property as defined in either the
General Asset Class or
North American Industry Classification System (NAICS) even if the like class have different class lives for depreciation purposes. For example, a car and a bus are not like class given their General Asset Classes are different.
Revenue Procedure 87-56, 1987-2 CB 674 defines
thirteen General Asset Classes for like kind tangible personal property exchanges.
(I) Office furniture, fixtures, and equipment (asset class 00.11);
(II) Information systems (computers and peripheral equipment) (asset class 00.12);
(III) Data-handling equipment, except computers (asset class 00.13);
(IV)
Airplanes (air frames and engines), except those used in commercial or
contract caring of passengers or freight, and all helicopters (air frames and engines) (asset class 00.21)(V) Automobiles, taxis (asset class 00.22);
(VI) Buses (asset class 00.23);
(VII) Light general-purpose trucks (asset class 00241);
(VIII) Heavy general-purpose trucks (asset class 00242);
(IX) Railroad cars and locomotives, except those owned by railroad transportation companies (asset class 00.25);
(X) Tractor units for use over the road (asset class 00.26);
(XI) Vessels, barges, tugs, and similar water transportation equipment, except those used in marine construction (asset class 00.28); and
(XII) Industrial steam and electric generation and/or distribution systems (asset class 00.4).
Additional personal property held in the production include:
Trades of major league sports contracts;
Noncurrency bullion type gold coins;
Patents and Copyrights;
Trademarks and trade names;
Designs and drawings;
Software;
Trade secrets and know-how.
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