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Additionally, the determination of the adjusted basis of the property received must be completed.
The section of the IRS code that addresses the issue of exchanges of property is section 1031. Section 1031 allows tax payers to defer gains and losses from exchanges of like kind property. The tax code specifies which type of property can be tax exempt and the stipulations for qualification to be like kind property, "No gain or loss shall be recognized on the exchange of property held for productive use in the trade or business for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment...
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