How to Report Sale of 1031 Exchange Land

[numberkruncher]

A client successfully completed a 1031 Exchange of undeveloped land in 2005. Now he's sold the replacement land, let's say for $100,000 with $50,000 of the total in an installment sale.

I've calculated the adjusted basis and capital gain, but am stumped how to split the reporting in his 1040. The land is a passive investment with no income other that the sale.

Should I just make life easy and report the installment portion on the 6252 and the rest on a 4797? I reported the original transaction on an 8824, but there's no provision for the eventual sale of a 1031 asset on that form that I see.

I'll keep searching, but I would really appreciate anyone's advice.

Thanks.

[abby]

no 8824 required

Unless you do another exchange, you need not fill in a form 8824. The prior exchange deferred gain is/should be reflected in the adjusted basis of the property.

It's now probably the same as any other installment sale.

However, if it is investment property, it won't need to go on a 4797.

Considerations:
If it was land for land, you shouldn't have any carryover section 1250 gain to worry about.

If you exchanged from one state to another, there may be tax due to the previous state now that you've disposed of the replacement property.

Hope that helps.

[numberkruncher]

nk

Okay. The 1031 exchange is properly in the past and I'm just reporting the sale of investment property - with the adjusted basis from the 1031 exchange.

Thanks

[les grans]

Seems to me you'll need Form 6252 to work out the installement sale, and then Schedule D (and maybe Form 4797, too) to report the gain. If the land was straight-up held for investment, it's a capital asset and the gain goes on Schedule D without Form 4797, IIRC.