Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 302 - Determination of Net Income › Rule 701-302.83 - Like-kind Exchanges of Personal Property Completed After December 31, 2017, but Before Tax Periods Beginning on or After January 1, 2020

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
In
				general.
Public
				Law 115-97,
				Section
				13303, repealed the deferral of gain or loss
				from exchanges of like-kind personal property for federal purposes under
				Section 1031 of the Internal Revenue Code. This federal repeal applies to
				exchanges completed after December 31, 2017, unless the taxpayer began the
				exchange by transferring personal property or receiving replacement personal
				property on or before that date. Iowa did not conform to this federal repeal
				for Iowa individual income tax purposes for tax periods beginning before
				January 1, 2019. For tax years beginning on or after January 1, 2019, but
				before January 1, 2020, Iowa generally conforms to the federal treatment of
				gain or loss from exchanges of like-kind personal property, but eligible
				taxpayers may elect the treatment that applied under prior federal law for Iowa
				purposes. For tax years beginning on or after January 1, 2020, Iowa fully
				conforms to the federal treatment for these exchanges, and no special election
				is available. This rule governs exchanges of like-kind personal property
				completed after December 31, 2017, but before tax periods beginning on or after
				January 1, 2020. This rule does not apply to exchanges completed during any tax
				year beginning on or after January 1, 2020.
(2)
Qualification.
Section
				1031 of the Internal Revenue Code in effect on December 21, 2017, and any
				applicable federal regulations govern whether transactions involving the
				disposition and acquisition of personal property qualify for Iowa individual
				income tax purposes as a like-kind exchange of personal property subject to the
				deferral of gain or loss, and also govern the date and tax period during which
				an exchange is considered completed. The treatment of such transactions as a
				like-kind exchange for Iowa individual income tax purposes is either mandatory
				or permissive depending on the date the like-kind exchange is completed.
a.
Like-kind exchanges completed
				after December 31, 2017, but before tax periods beginning on or after January
				1, 2019.
Transactions involving the disposition and acquisition of
				personal property that qualify under this subrule as a like-kind exchange
				completed after December 31, 2017, but before tax periods beginning on or after
				January 1, 2019, are required to be treated as a like-kind exchange for Iowa
				individual income tax purposes.
b.
Like-kind exchanges completed during tax periods beginning on or after
				January 1, 2019, but before January 1, 2020.
For tax periods beginning
				on or after January 1, 2019, Iowa is conformed to the federal repeal of
				deferral of gain or loss from exchanges of like-kind personal property, so the
				federal and Iowa treatment of such transactions under Section 1031 of the
				Internal Revenue Code will generally be the same. However, transactions
				involving the disposition and acquisition of personal property that qualify
				under this subrule as a like-kind exchange completed during tax periods
				beginning on or after January 1, 2019, but before January 1, 2020, may at the
				election of the taxpayer be treated as a like-kind exchange for Iowa individual
				income tax purposes. The election is made by completing the necessary
				worksheets and forms and making the required adjustments on the Iowa return as
				described in subrule 40.83(3). No special attachment or statement is required.
				The election only applies to the transactions involved in the like-kind
				exchange, and the taxpayer may elect or not elect to treat other qualifying
				transactions as a like-kind exchange for Iowa purposes.