Iowa Administrative Code › Agency 701 - Revenue Department › Title I - Administration › Chapter 59 - Determination of Net Income › Rule 701-59.10 - 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				13303, repealed the deferral of gain or loss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 franchise 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 franchise 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 franchise 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 franchise 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 franchise 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 59.10(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.