Like Kind Exchange (LKE) Program
Do you routinely enter into sale and purchase agreements for tangible personal property?
Are you a vehicle, equipment, or aircraft leasing company or have an operating lease for 100 or more assets?
Are you an oil and gas company that maintains and replaces their drilling equipment?
Does your company maintain a fleet of
cars, vans, or trucks for employee use?
You may be needlessly spending valuable investment dollars on federal income taxes. These taxes may be deferred under Internal Revenue Code §1031 if the sales proceeds from the sale of business assets are used towards the purchase of similar business assets. This translates into more operating capital. Companies with portfolios of leased or rented assets or companies with vehicle fleets used in their operations should consider a LKE program.
Though the exchange steps are similar to the exchange of real property, there are distinct differences that are defined by Revenue Procedure 2003-39. Often companies do not take advantage of the LKE provisions because of the labor intensity of tracking relinquished and replacement assets and burdensome regulatory requirements. Furthermore, those companies that have employed bonus depreciation will have a large tax bill when the assets are sold. The recaptured depreciation tax can be deferred in a §1031 exchange.To learn more, Ask The 1031 Expert, Contact Us, call us at the number to the left and sign up for our newsletter Exchange Tips and Information. Register for Twitter, Facebook or LinkedIn to receive IRS updates on 45 and 180 day extensions and pertinent Court rulings.