Realize Limitations of Like-Kind Exchanges

FARMERS and landowners have long benefi ted from like-kind exchanges. The concept allows a person to exchange a business property for a similar type property without incurring immediate tax liability. Perhaps benefi ting most from like-kind exchanges are those landowners that have sold high-priced land for development and have used those funds to purchase farmland elsewhere. For example, a landowner may sell land for development for $20,000 per acre and use those sale proceeds to purchase farmland for $4,000 per acre, thus receiving 5 acres for every 1 sold, all while incurring no immediate tax liability.

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