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2024

Instructions for Form 8824

Like-Kind Exchanges
(and section 1043 conflict-of-interest sales)

Section references are to the Internal Revenue Code unless Certain members of the executive branch of the federal
otherwise noted. government and judicial officers of the federal government use Part
IV to elect to defer gain on conflict-of-interest sales. Judicial officers
of the federal government are the following.
Future Developments
1. Chief Justice of the United States.
For the latest information about developments related to Form 8824 2. Associate Justices of the Supreme Court.
and its instructions, such as legislation enacted after they were
published, go to IRS.gov/Form8824. 3. Judges of the:
a. United States courts of appeals;
b. United States district courts, including the district courts in
What’s New Guam, the Northern Mariana Islands, and the Virgin Islands;
New instructions for completing lines 12a, 15a, and 25a c. Court of Appeals for the Federal Circuit;
through 25c on e-filed Forms 8824. Lines 12a, 15a, and 25a d. Court of International Trade;
through 25c have been added to e-filed Forms 8824. E-filers no
longer need to attach a separate sheet providing details for those e. Tax Court;
lines. See Line 12a Line 15a, , and Lines 25a, 25b, and 25c, later. f. Court of Federal Claims;
Expanded examples. We expanded the examples in Figuring g. Court of Appeals for Veterans Claims;
amounts for lines 15 through 20 and Figuring amounts for lines 21 h. United States Court of Appeals for the Armed Forces; and
through 24, later. i. Any court created by an Act of Congress, the judges of which
are entitled to hold office during good behavior.
General Instructions Multiple exchanges. If you made more than one like-kind
exchange, you can file a summary on one Form 8824 and attach
Reminders your own statement showing all the information requested on Form
Exchanges limited to real property. For 2018 and later years, 8824 for each exchange. Include your name and identifying number
section 1031 like-kind exchange treatment applies only to at the top of each page of the statement. On the summary Form
exchanges of real property held for use in a trade or business or for 8824, enter only your name and identifying number, “Summary” on
investment, other than real property held primarily for sale. line 1, the total recognized gain from all exchanges on line 23, and
Regulations sections 1.1031(a)-1, 1.1031(a)-3, and 1.1031(k)-1 the total basis of all like-kind property received on line 25.
provide a definition of real property under section 1031, address a
taxpayer's receipt of personal property incidental to the like-kind real When To File
property received, and apply to like-kind exchanges after December If during the current tax year you transferred property to another
2, 2020. See Definition of Real Property, later, for more details. party in a like-kind exchange, you must file Form 8824 with your tax
return for that year. Also file Form 8824 for the 2 years following the
Special rules for capital gains invested in qualified opportunity year of a related party exchange. See Line 7, later, for details.
funds (QOFs). Effective December 22, 2017, section 1400Z-2
provides a temporary deferral of inclusion in gross income for capital Like-Kind Exchanges (Form 8824:
gains invested in QOFs, and permanent exclusion of capital gains
from the sale or exchange of an investment in the QOF if the Parts I, II, and III)
investment is held for at least 10 years. See the Form 8949
instructions on how to report your election to defer eligible gains Section 1031 regulations. Regulations sections 1.1031(a)-1,
invested in a QOF. 1.1031(a)-3, and 1.1031(k)-1 implement statutory changes limiting
For additional information (including details on investments in the application of section 1031 to exchanges of real property. These
QOFs held for at least 10 years), see Opportunity Zones Frequently regulations, which apply to like-kind exchanges beginning after
Asked Questions, at IRS.gov. December 2, 2020, provide a definition of real property under
section 1031, and address a taxpayer's receipt of personal property
Qualified opportunity investment. If you are an eligible taxpayer that is incidental to real property the taxpayer receives in the
who held a qualified investment in a QOF at any time during the year, exchange.
you must file your tax return with Form 8997, Initial and Annual Generally, if you exchange business or investment real property
Statement of Qualified Opportunity Fund (QOF) Investments, solely for business or investment real property of a like kind, section
attached. See the Form 8997 instructions. 1031 provides that no gain or loss is recognized. If, as part of the
exchange, you also receive other (non-like-kind) property or money,
Purpose of Form gain is recognized to the extent of the other property and money
Use Parts I, II, and III of Form 8824 to report each exchange of received, but a loss isn't recognized.
business or investment real property for real property of a like kind. Section 1031 doesn’t apply to exchanges of real property held
Form 8824 figures the amount of gain deferred as a result of a primarily for sale. See section 1031(a)(2). In addition, section 1031
like-kind exchange. Use Part III to figure the amount of gain required doesn't apply to certain exchanges involving tax-exempt use
to be reported on the tax return in the current year if cash or property property subject to a lease. See section 470(e)(4).
that isn't of a like kind is involved in the exchange. Also, use Part III to
figure the basis of the like-kind property received. Like-kind property. Properties are of like kind if they are of the
same nature or character, even if they differ in grade or quality.
Instructions for Form 8824 (2024) Catalog Number 12597K
Oct 18, 2024 Department of the Treasury Internal Revenue Service www.irs.gov

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Generally, real properties are like-kind properties, regardless of section 1031 purposes, regardless of the use or purpose of the
whether they are improved or unimproved properties. property or whether it contributes to the production of income. In
Property classified as real property under one of the definitions in addition, a structural component is real property for section 1031
the final regulations discussed above may be like-kind to other real purposes if it is a constituent part of, and integrated into, an
property defined under another definition in the regulations. inherently permanent structure, regardless of whether the structural
component contributes to the production of income. For example,
However, real property in the United States and real property items of machinery or equipment are real property for like-kind
outside the United States aren't like-kind properties. See Pub. 544, exchange purposes if they comprise an inherently permanent
Sales and Other Dispositions of Assets, for more details. structure, a structural component of an inherently permanent
structure, or are classified as real property under state or local law.
Definition of Real Property
Regulations section 1.1031(a)-3 defines real property as land and Deferred Exchanges
improvements to land, unsevered natural products of the land, and A deferred exchange occurs when, based on an agreement, the
water and air space superjacent to land. It is further described as property received in the exchange is received after the transfer of the
tangible and intangible real property, as discussed later. property given up. For real property associated with a deferred
Tangible property. Tangible property is real property for purposes exchange to qualify as like kind, you must comply with the timing
of section 1031 if it meets any of the following. requirements for identification and receipt of replacement property.
• On the date it is transferred in an exchange, the property is The replacement property for the exchange must be identified within
classified as real property under the law of the state or local 45 days after the property being given up is transferred. The
jurisdiction in which the property is located. See Regulations section replacement property must be received within 180 days, or by the
1.1031(a)-3(a)(6) and Intangible property next. due date of your tax return (including extensions), whichever is
• The property is specifically listed as real property in Regulations earlier. See the instructions for Line 5 and Line 6, later, for more
section 1.1031(a)-3. See Stock that is real property, later. details.
• The property is considered real property based on all the facts
and circumstances under the various factors provided in Regulations If you make a deferred exchange using a qualified intermediary
section 1.1031(a)-3(a)(2). See Property affixed to or integrated into (QI), the transfer of the property given up and receipt of like-kind
real property, later. property is treated as a like-kind exchange. If you fail to meet the
timing requirements because of the QI, your transaction won't qualify
Each distinct asset is separately analyzed from any other distinct as a deferred exchange and any gain may be taxable in the year you
asset to which it relates for purposes of determining whether the transferred the property. However, if the QI defaults on its obligation
asset is real property under section 1031. See Regulations section to acquire and transfer replacement property because of bankruptcy
1.1031(a)-3(a)(4). or receivership proceedings and you meet certain requirements, you
Intangible property. Intangible property is real property for may be able to report the gain in the year or years payments are
purposes of section 1031 if it meets any of the following, subject to received. For the requirements, see Rev. Proc. 2010-14, 2010-12
the exceptions provided in Intangible property that is never real I.R.B. 456, available at IRS.gov/irb/2010-12_IRB#RP-2010-14.
property under section 1031 next. Related parties and agents of the taxpayer aren’t eligible to be QIs,
• On the date it is transferred in an exchange, the property is and are referred to as “disqualified persons.” For more information on
classified as real property under the law of the state or local QIs and disqualified persons, see Pub. 544, chapter 1.
jurisdiction in which the property is located. The QI exchange constitutes one safe harbor. For more
• It is specifically listed in Regulations section 1.1031(a)-3 as real TIP details on QI exchanges and for a discussion of other safe
property. harbors, see Pub. 544.
• It derives its value from real property or an interest in real property
and is inseparable from that real property or interest in real property Incidental personal property. For deferred like-kind exchanges
(for example, an easement or an option to acquire real property). involving a QI, personal property that is incidental to replacement
See Regulations section 1.1031(a)-3(a)(5). real property (incidental personal property) is disregarded in
Intangible property that is never real property under section determining whether a taxpayer's rights to receive, pledge, borrow,
1031. The following assets are exceptions and not real property for or otherwise obtain the benefits of money or non-like-kind property
purposes of section 1031, regardless of the classification of the held by the QI are expressly limited, as provided in Regulations
property under state or local law. section 1.1031(k)-1(g)(6) and (7).
• Stock (other than the type of stock described in Stock that is real Personal property is incidental to real property acquired in an
property next), bonds, or notes. exchange if:
• Other securities or evidences of indebtedness or interest. • In standard commercial transactions, the personal property is
• Interests in a partnership (other than an interest in a partnership typically transferred together with the real property; and
that has in effect a valid election under section 761(a) to be excluded • The aggregate fair market value (FMV) of the incidental personal
from the application of all of subchapter K). property transferred with the real property doesn’t exceed 15% of the
• Certificates of trust or beneficial interests. aggregate FMV of the replacement real property or properties
• Choses in action. received in the exchange (15% limitation). See Regulations section
1.1031(k)-1(g)(7).
Stock that is real property. The following stock is listed in
Regulations section 1.1031(a)-3 as real property for section 1031 Exchange with a related party. Special rules limit nonrecognition
purposes. for an exchange with a related party. See Line 7, later.
• Stock in a cooperative housing corporation.
• Shares in a mutual ditch, reservoir, or irrigation company Multi-Asset Exchanges
described in section 501(c)(12)(A) if, at the time of the exchange, A multi-asset exchange involves the transfer and receipt of more
such shares have been recognized by the highest court of the state than one group of like-kind properties. The transfer or receipt of
in which the company was organized, or by a state statute, as multiple properties within one like-kind group is also a multi-asset
constituting or representing real property or an interest in real exchange. However, an exchange of a single piece of land, a
property. vehicle, and cash for a single piece of land and a vehicle isn’t a
Property affixed to or integrated into real property. If tangible multi-asset exchange because, of the assets transferred, section
property is permanently affixed to real property and will ordinarily 1031 may apply only to the exchange of the land for other land.
remain affixed for an indefinite period of time, the property is Special rules apply when figuring the amount of gain recognized and
generally an inherently permanent structure and real property for your basis in properties received in a multi-asset exchange. For
details, see Regulations section 1.1031(j)-1.

2 2024 Instructions for Form 8824

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Reporting of multi-asset exchanges. If you transferred and Additional Information
received (a) more than one group of like-kind properties, or (b) cash For more information on like-kind exchanges, see section 1031, its
or other (non-like-kind) property, don't complete lines 12 through 18 regulations, and Pub. 544.
of Form 8824. Instead, attach your own statement showing how you
figured the realized and recognized gain, and enter the correct
amount on lines 19 through 25. Report any recognized gains on your Specific Instructions
Schedule D (Form 1040); Form 4797, Sales of Business Property; or
Form 6252, Installment Sale Income, whichever applies. Lines 1 and 2. Generally, only real property should be described on
lines 1 and 2, including intangible property that is treated as real
Exchanges Using a Qualified Exchange property for like-kind exchange purposes. Enter the address and
Accommodation Arrangement (QEAA) type of property. For property that is treated as real property for
like-kind exchange purposes, but doesn’t have an address, enter a
If property is transferred to an exchange accommodation titleholder short description. If the property described on line 1 or line 2 is real
(EAT) and held in a QEAA, the EAT may be treated as the beneficial property located outside the United States, indicate the country.
owner of the property, the property transferred from the EAT to you
may be treated as property you received in an exchange, and the Line 5. Enter on line 5 the date of the written identification of the
property you transferred to the EAT may be treated as property you like-kind property you received in a deferred exchange. To comply
gave up in an exchange. This may be true even if the property you with the 45-day written identification requirement, the following
are to receive is transferred to the EAT before you transfer the conditions must be met.
property you are giving up. However, the property transferred to you 1. The like-kind property you receive in a deferred exchange is
can't be treated as property received in an exchange if you designated in writing as replacement property either in a document
previously owned it within 180 days of its transfer to the EAT. For you signed or in a written agreement signed by all parties to the
details, see Rev. Proc. 2000-37, as modified by Rev. Proc. 2004-51. exchange.
Rev. Proc. 2000-37 is on page 308 of Internal Revenue Bulletin 2. The document or agreement describes the replacement
2000-40 at IRS.gov/pub/irs-irbs/irb00-40.pdf. Rev. Proc. 2004-51, property in a clear and recognizable manner. Real property should
2004-33 I.R.B. 294, is available at IRS.gov/irb/ be described using a legal description, street address, or
2004-33_IRB#RP-2004-51. distinguishable name (for example, “Mayfair Apartment Building”).
Property Used as Home 3. No later than 45 days after the date you transferred the
property you gave up:
If the property given up was owned and used as your main home for
at least a total of 2 years during the 5-year period ending on the date a. You fax, hand deliver, mail, or otherwise send the document
of the exchange, you may be able to exclude part or all of any gain you signed to the person required to transfer the replacement
figured on Form 8824. property to you (including a disqualified person) or to another person
involved in the exchange (other than a disqualified person); or
For details on the exclusion of gain (including how to figure the b. All parties to the exchange sign the written agreement
amount of the exclusion), see Pub. 523, Selling Your Home. Fill out designating the replacement property.
Form 8824 according to its instructions, with the following
exceptions. Generally, a disqualified person is either your agent at the time of
1. Subtract line 18 from line 17. Enter that result on line 19. On the transaction or a person related to you. For more details, see
the dotted line next to line 19, enter “Section 121 exclusion” and the Regulations section 1.1031(k)-1(k). For more information on related
amount of the exclusion. persons, see Line 7, later. Also, see details on disqualified persons
in Pub. 544.
2. On line 20, enter the smaller of:
a. Line 15 minus the exclusion, or Note. If you received the replacement property before the end of the
b. Line 19. 45-day period, you are automatically treated as having met the
45-day written identification requirement. In this case, enter on line 5
Don't enter less than zero. the date you received the replacement property.
3. Subtract line 15 from the sum of lines 18 and 23. Add the
amount of your exclusion to the result. Enter that sum on line 25. Line 6. Enter on line 6 the date you received the like-kind property
from the other party.
Report, on line 15a, a description of the other (non-like-kind) The property must be received by the earlier of the following
property received. If applicable, total FMV reported on line 25 is dates.
further allocated on lines 25a, 25b, and 25c, based on section 1250, • The 180th day after the date you transferred the property given up
section 1245, or intangible real property received in the exchange, in the exchange.
respectively. • The due date (including extensions) of your tax return for the year
Property used partly as home. If the property given up was used in which you transferred the property given up.
partly as a home, and partly for business or investment, you will Line 7. Special rules apply to like-kind exchanges made with
need to use two separate Forms 8824 as worksheets. Use one related parties, either directly or indirectly. A related party includes
worksheet for the part of the property used as a home, and the other your spouse, child, grandchild, parent, grandparent, brother, sister,
worksheet for the part used for business or investment. Fill out only or a related corporation, S corporation, partnership, trust, estate, or
lines 15 through 25 of each worksheet Form 8824. On the worksheet tax-exempt organization. See section 1031(f).
Form 8824 for the part of the property used as a home, follow steps
1 through 3 above, except that instead of following step 2, enter the An exchange made indirectly with a related party includes:
amount from line 19 on line 20. On the worksheet Form 8824 for the • An exchange made with a related party through an intermediary
part of the property used for business or investment, follow steps 1 (such as a QI or an EAT, as defined in Pub. 544); or
through 3 above only if you can exclude at least part of any gain from • An exchange made by a disregarded entity (such as a
the exchange of that part of the property; otherwise, complete the single-member limited liability company) if you or a related party
form according to its instructions. Enter the combined amounts from owned that entity.
lines 15 through 25 of both worksheet Forms 8824 on the Form 8824 An exchange structured to avoid the related party rules isn't a
you file. Don't file either worksheet with Form 8824. like-kind exchange. Don't report it on Form 8824. Instead, you
More information. For details, see Rev. Proc. 2005-14, 2005-7 should report the disposition of the property given up as if the
I.R.B. 528, available at IRS.gov/irb/2005-07_IRB#RP-2005-14. exchange had been a sale. See section 1031(f)(4). Such an
exchange includes the transfer of property you gave up to a QI in

2024 Instructions for Form 8824 3

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exchange for property you received that was formerly owned by a • Net liabilities assumed by the other party—the excess, if any, of
related party if the related party received cash or other liabilities (including mortgages) assumed by the other party over the
(non-like-kind) property for the property you received, and you used total of (a) any liabilities you assumed, (b) cash you paid to the other
the QI intermediary to avoid the application of the related party rules. party, and (c) the FMV of the other (non-like-kind) property you gave
See Rev. Rul. 2002-83 for more details. You can find Rev. Rul. up.
2002-83 on page 927 of Internal Revenue Bulletin 2002-49 at Reduce the sum of the above amounts (but not below zero) by
IRS.gov/pub/irs-irbs/irb02-49.pdf. any exchange expenses you incurred.
If, after the exchange, you own replacement property that a The following rules apply in determining the amount of liability
! related party sold into the exchange for cash, or other treated as assumed.
CAUTION (non-like-kind) property, through an unrelated party such as • A recourse liability (or portion thereof) is treated as assumed by
a QI, don't report the transaction on Form 8824 unless one of the the party receiving the property if that party has agreed to and is
exceptions on line 11 applies. Instead, report the disposition of the expected to satisfy the liability (or portion thereof). It doesn't matter
property given up as if the exchange had been a sale. whether the party transferring the property has been relieved of the
liability.
If you met one of the exceptions on line 11, and you or the related • A nonrecourse liability is generally treated as assumed by the
party (either directly or indirectly) dispose of property received in an party receiving the property subject to the liability. However, if an
exchange before the date that is 2 years after the last transfer that owner of other assets subject to the same liability agrees with the
was part of the exchange, the deferred gain or (loss) from line 24 party receiving the property to, and is expected to, satisfy part or all
must be reported on your tax return for the year of disposition of the liability, the amount treated as assumed is reduced by the
(unless an exception on Form 8824, line 11, applies). smaller of (a) the amount of the liability that the owner of the other
The running of the 2-year holding period will be tolled for any assets has agreed to and is expected to satisfy, or (b) the FMV of
those other assets.
! period during which your risk of loss is substantially
CAUTION reduced. See Two-year holding period in Pub. 544. Line 15a. On line 15a, enter a description of the other
(non-like-kind) property received.
If you are filing this form for 1 of the 2 years following the year of
the exchange, complete Parts I and II. If both lines 9 and 10 are “No,” Beginning with 2024 Form 8824, e-filers will not attach a
stop. You don't have to complete Part III. ! separate sheet to their Form 8824 with the information for
CAUTION lines 12a, 15a, and 25a through 25c. Those lines are now on
If either line 9 or line 10 is “Yes,” and an exception on line 11 their e-filed Form 8824 and should be completed on the form itself.
applies, check the applicable box on line 11, attach any required
explanation, and stop. If none of the exceptions on line 11 apply, Line 18. Include on line 18 the sum of:
complete Part III. Report the deferred gain or (loss) from line 24 on • The adjusted basis of the like-kind real property you gave up;
this year's tax return as if the exchange had been a sale. • Exchange expenses, if any (except for expenses used to reduce
Lines 11a through 11c. The line 11 exceptions are in Form 8824 the amount reported on line 15); and
on lines 11a through 11c. These are the exceptions. • The net amount paid to the other party—the excess, if any, of the
• Line 11a. The disposition was after the death of either party. total of (a) any liabilities you assumed, (b) cash you paid to the other
• Line 11b. The disposition was an involuntary conversion and the party, and (c) the FMV of the other (non-like-kind) property you gave
threat of conversion occurred after the exchange. up over any liabilities assumed by the other party.
• Line 11c. You can establish to the satisfaction of the IRS that Figuring amounts for lines 15 through 20. See Regulations
neither the disposition nor the exchange had tax avoidance as one section 1.1031(d)-2 and the following example for figuring amounts
of its principal purposes. to enter on lines 15 through 20.
Line 11c. If you believe that you can establish to the satisfaction Example. Taylor owns an apartment building with an FMV of
of the IRS that tax avoidance wasn’t a principal purpose of both the $220,000, with an adjusted basis of $100,000, and that is subject to
exchange and the disposition, attach an explanation. Generally, tax a mortgage of $80,000. Finley owns an apartment building with an
avoidance won't be seen as a principal purpose in the case of: FMV of $250,000, with an adjusted basis of $175,000, and that is
• A disposition of property in a nonrecognition transaction, subject to a mortgage of $150,000.
• An exchange in which the related parties derive no tax advantage
from the shifting of basis between the exchanged properties, or Taylor transfers Taylor’s apartment building to Finley and receives
• An exchange of undivided interests in different properties that in exchange Finley's apartment building plus $40,000 cash. Taylor
results in each related party holding either the entire interest in a assumes the mortgage on the apartment building received from
single property or a larger undivided interest in any of the properties. Finley, and Finley assumes the mortgage on the apartment building
received from Taylor.
Lines 12, 12a, 13, and 14. Lines 12 and 12a should be completed
if other property that doesn't qualify as like-kind property was part of Summary of Facts
the exchange, in addition to the like-kind property. On line 12, enter
the FMV of the other (non-like-kind) property that was given up. Taylor Property Finley Property
Line 12a. On line 12a, enter a description of the other FMV – Real Property $220,000 $250,000
(non-like-kind) property given up. Adjusted Basis $100,000 $175,000
Mortgage $80,000 $150,000
Beginning with 2024 Form 8824, e-filers will not attach a Cash Boot $0 $40,000
! separate sheet to their Form 8824 with the information for
CAUTION lines 12a, 15a, and 25a through 25c. Those lines are now on
their e-filed Form 8824 and should be completed on the form itself. Taylor files a Form 8824. Taylor enters on line 15 of the Form
Line 13. On line 13, enter the adjusted basis of the other property 8824 only the $40,000 cash received from Finley, and, on line 15a,
given up. enters the description of the other (non-like-kind) property received
Line 14. The gain or (loss) from the other property given up is as “cash.” The $80,000 of liabilities assumed by Finley isn't included
figured on line 14 and must be reported on your tax return. Report because it doesn't exceed the $150,000 of liabilities Taylor assumed.
gain or (loss) as if the exchange were a sale. Taylor enters $250,000 on line 16, the FMV of the apartment building
received from Finley. Taylor enters $290,000 on line 17, the sum of
Lines 15 and 15a. Include on line 15 the sum of: lines 15 and 16. Taylor enters $170,000 on line 18—the $100,000
• Any cash paid to you by the other party; adjusted basis, plus the $70,000 excess of the liabilities Taylor
• The FMV of other (non-like-kind) property you received, if any; assumed over the liabilities assumed by Finley ($150,000 -
and $80,000). Taylor subtracts line 18 from line 17 and enters the

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$120,000 gain realized on the exchange on line 19. Taylor enters section 1245 real property assets have a FMV of $55,000, a cost
$40,000 on line 20, the lesser of line 15 or line 19. basis of $35,000, and an adjusted basis of zero. The section 1245
Finley files a Form 8824. Finley enters $30,000 on Finley’s Form property is real property for section 1031 like-kind exchange
8824, line 15—the excess of the $150,000 of liabilities assumed by treatment. The total depreciation allowed or allowable on the section
Taylor, over the sum of the $80,000 of liabilities assumed from Taylor 1245 property is $35,000. All of the property Taylor received from
and the $40,000 cash Finley paid Taylor ($120,000). On line 15a, Finley is section 1250 property. The section 1245(a)(1) ordinary
Finley writes “liabilities and cash.” Finley enters $220,000 on line 16, income recapture amount is $35,000 (the lesser of the property's
the FMV of the apartment building received from Taylor. Finley depreciable basis of $35,000 or the amount realized of $55,000).
enters $250,000 on line 17, the sum of lines 15 and 16. Finley enters Summary of Facts
on line 18 only the adjusted basis of $175,000, because the total of
the $80,000 of liabilities Finley assumed from Taylor and the $40,000 Taylor Property Finley Property
cash Finley paid Taylor doesn't exceed the $150,000 of liabilities FMV - Real Property $220,000 $250,000
assumed by Taylor. Finley subtracts line 18 from line 17 and enters Adjusted Basis Real $100,000 $175,000
the $75,000 in gain realized on line 19. Finley enters $30,000 on Property
line 20, the lesser of line 15 or line 19. FMV - 1245 Real Property $55,000 $0
Line 21. If you disposed of section 1245, 1250, 1252, 1254, or 1255 Basis - 1245 Property $35,000 $0
property (see the instructions for Part III of Form 4797), you may be Adjusted Basis - 1245
required to recapture as ordinary income part or all of the realized Property $0 $0
gain (line 19). Figure the amount to enter on line 21 as follows. FMV - 1250 Property $165,000 $250,000
Section 1245 real property. Enter the smaller of: Mortgage Boot $80,000 $150,000
Cash Boot $0 $40,000
1. The total adjustments for deductions (whether for the same
or other property) allowed or allowable to you or any other person for
depreciation or amortization (up to the amount of gain shown on
line 19); or Taylor enters $35,000 on line 21 as ordinary income under the
section 1245(b)(4) recapture rules, the lesser of the $35,000 of
2. The gain shown on line 20, if any, plus the FMV of section 1245(a)(1) ordinary income recapture or the Line 20 gain of
non-section 1245 like-kind property received. $40,000 plus the FMV of non-section 1245 property acquired of
Section 1250 property. Enter the smaller of: $250,000, which is $290,000. Taylor subtracts line 21 from line 20
and enters $5,000 on line 22. Taylor enters the sum of lines 21 and
1. The gain you would have had to report as ordinary income 22, $40,000, on line 23. Taylor subtracts line 23 from line 19 and
because of additional depreciation if you had sold the property (see enters the deferred gain on the exchange, $80,000, on line 24.
the Form 4797 instructions for line 26); or
Alternatively, assume that Taylor's section 1245 assets had a
2. The larger of: basis and allowed or allowable depreciation of $50,000 instead of
a. The gain shown on line 20, if any; or $35,000. The section 1245(a)(1) ordinary income recapture amount
b. The excess, if any, of the gain in (1) above over the FMV of is $50,000 (the lesser of the property's depreciable basis of $50,000,
the section 1250 property received. or the amount realized of $55,000). Taylor enters the lesser of the
$50,000 section 1245(a)(1) ordinary income recapture, or $290,000
Section 1252, 1254, and 1255 property. The rules for these (the gain recognized of $40,000 plus the $250,000 FMV of
types of property are similar to those for section 1245 property. See non-section 1245 property received) on line 21, as ordinary income
Regulations sections 1.1252-2(d) and 1.1254-2(d) and Temporary of $50,000. Taylor subtracts line 21 from line 20 and enters $0 on
Regulations section 16A.1255-2(c) for details. line 22. Taylor enters the sum of lines 21 and 22, $50,000, on line 23.
If the installment method applies to this exchange: Taylor subtracts line 23 from line 19 and enters the deferred gain on
1. See section 453(f)(6) to determine the installment sale the exchange, $70,000, on line 24.
income taxable for this year and report it on Form 6252;
2. Enter on Form 6252, line 25 or 36, the section 1252, 1254, or Section 1245(b)(4) recapture is the lesser of:
1255 recapture amount you figured on Form 8824, line 21—don't 1. $50,000 (Section 1245(a)(1) recapture on Taylor’s Property), or
enter more than the amount shown on Form 6252, line 24 or 35; 2. $290,000, which is the total of 2a and 2b below
3. Also enter this amount on Form 4797, line 15; and 2a. $40,000 (Gain Recognized)
4. If all the ordinary income isn't recaptured this year, report in 2b. $250,000 (FMV non-section 1245 property received).
future years on Form 6252 the ordinary income up to the taxable
installment sale income, until it is all reported.
Assume that Finley previously allocated $50,000 of the basis in
Line 22. Report a gain from the exchange of property used in a Finley’s apartment building to section 1250 qualified improvement
trade or business (and other noncapital assets) on Form 4797, line 5 property and determines that the section 1250 assets have a fair
or line 16. Report a gain from the exchange of capital assets market value of $50,000 and adjusted basis of zero. The total
according to the Schedule D (Form 1040) instructions for your tax depreciation that would have been allowable on the straight-line
return. Be sure to use the date of the exchange as the date for method for the section 1250 property is $15,000, so the excess
reporting the gain. If the installment method applies to this $35,000 in depreciation taken over the straight-line depreciation is
exchange, see section 453(f)(6) to determine the installment sale Finley’s section 1250(a)(1)(A) recapture amount. Finley computes
income taxable for this year and report it on Form 6252. the section 1250(d)(4)(A) recapture limit as the greater of the gain
Line 24. If line 19 is a loss, enter it on line 24. Otherwise, subtract recognized on line 20 of $30,000, and $0 (the section 1250(a)(1)(A)
the amount on line 23 from the amount on line 19 and enter the recapture amount of $35,000 less the FMV of section 1250 property
result. For exchanges with related parties, see Line 7, earlier. received of $165,000). Finley enters $30,000 on line 21 as ordinary
income, the lesser of the $35,000 of section 1250(a)(1)(A) recapture
Figuring amounts for lines 21 through 24. See the following or the section 1250(d)(4)(A) recapture limit of $30,000. Finley
example for figuring the amounts to enter on lines 21 through 24. subtracts line 21 from line 20 and enters $0 on line 22. Finley enters
Example. In addition to the facts in the example for lines 15 $30,000 on line 23, the sum of lines 21 and 22. Finley subtracts
through 20, assume that Taylor previously allocated a portion of the line 23 from line 19 and enters the deferred gain on the exchange,
basis in Taylor’s apartment building for depreciation purposes under $45,000, on line 24.
section 168 to assets that are section 1245 property. Applying
section 1.1031(a)-3 of the regulations, Taylor determines that the

2024 Instructions for Form 8824 5

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Section 1250 recapture is the lesser of: Section 1043 Conflict-of-Interest
1. $35,000 (Section 1250(a)(1)(A) recapture on Finley’s property), or
2. $30,000 (Section 1250(d)(4)(A) recapture limit, which is the greater Sales (Part IV)
of 2a or 2b below). If you, as an eligible person, sell property at a gain according to a
2a. $30,000 (Gain recognized on the exchange), or certificate of divestiture issued by the Office of Government Ethics
2b. $0: ($35,000 (Section 1250(a)(1)(A) recapture) reduced, but (OGE) or the Judicial Conference of the United States (or its
not below zero, by $165,000 (FMV Section 1250 property designee) and purchase replacement property (permitted property),
you can elect to defer part or all of the realized gain. You must
received)). recognize gain on the sale only to the extent that the amount realized
on the sale is more than the cost of replacement property purchased
during the 60-day period beginning on the date of such sale. (You
Lines 25, 25a, 25b, and 25c. The amount on line 25 is your basis must also recognize any ordinary income recapture.) Permitted
in the like-kind property you received in the exchange. Your basis in property is any obligation of the United States or any diversified
other property (non-like-kind) received in the exchange, if any, is its investment fund approved by the OGE. “Eligible persons” includes
FMV. an officer or employee of the executive branch, or a judicial officer of
Lines 25a, 25b, and 25c. If you received section 1250 property, the federal government, but not a special government employee
section 1245 property, and/or intangible property that is like-kind defined in 18 U.S.C. section 202. “Eligible persons” also includes
property in the exchange, you must complete line 25a, 25b, and/or any spouse, minor, or dependent child whose ownership of any
25c, whichever are applicable. property is attributable to such an officer or employee.
• On line 25a, enter the amount from line 25 that is allocated to the If the property you sold was stock you acquired by exercising
like-kind section 1250 property received in the exchange. TIP a statutory stock option, you may be treated as meeting the
• On line 25b, enter the amount from line 25 that is allocated to the holding period requirements that apply to such stock,
like-kind section 1245 property received in the exchange. regardless of how long you actually held the stock. This may benefit
• On line 25c, enter the amount from line 25 that is allocated to the you if you don't defer your entire gain, because it may allow you to
like-kind intangible property received in the exchange. treat the gain as a capital gain instead of ordinary income. For
Amounts entered on lines 25a, 25b, and 25c must be details, see section 421(d) or Pub. 525, Taxable and Nontaxable
proportionate to their FMVs. Income.
Beginning with 2024 Form 8824, e-filers will not attach a
Complete Part IV of Form 8824 only if the cost of the replacement
! separate sheet to their Form 8824 with the information for property is more than the basis of the divested property and you
CAUTION lines 12a, 15a, and 25a through 25c. Those lines are now on
their e-filed Form 8824 and should be completed on the form itself. elect to defer the gain. Otherwise, report the sale on your
Schedule D (Form 1040) or Form 4797, whichever applies.
Example. Referring to the facts in the examples for lines 15
through 24, Taylor determines the apartment building received from Your basis in the replacement property is reduced by the amount
Finley contains only like-kind section 1250 property and no section of the deferred gain. If you made more than one purchase of
1245 property and no intangible property treated as section 1031 replacement property, reduce your basis in the replacement property
like-kind property. in the order you acquired it.
Summary of Facts Line 30. Enter the amount you received from the sale of the
divested property, minus any selling expenses.
Taylor Property Finley Property
FMV - 1250 Real Property $165,000 $250,000 Line 35. Follow these steps to determine the amount to enter.
FMV - 1245 Real Property $55,000 $0 1. Use Part III of Form 4797 as a worksheet to figure ordinary
Basis - 1245 Property $35,000 $0 income under the recapture rules.
Adjusted Basis - 1245 2. Enter on Form 8824, line 35, the amount from Form 4797,
Property $0 $0 line 31. Don't attach the Form 4797 used as a worksheet to your tax
Mortgage Boot $80,000 $150,000 return.
Cash Boot $0 $40,000
3. Report the amount from line 35 on Form 4797, line 10, in
column (g). In column (a), enter “From Form 8824, line 35.” Don't
Taylor subtracts line 15 from the sum of lines 18 and 23 and enters complete columns (b) through (f).
$170,000 on line 25. Taylor allocates the entire $170,000 to the
basis of the like-kind section 1250 property received in the Line 36. If you sold a capital asset, enter any capital gain from
exchange. Taylor completes a Form 8824. Taylor reports the line 36 on your Schedule D (Form 1040). If you sold property used in
$170,000 on line 25a. See Regulations sections 1.1245-5(a)(1) and a trade or business (or any other asset for which the gain is treated
1.1250-3(d)(4). as ordinary income), report the gain on Form 4797, line 2 or line 10,
in column (g). In column (a), write “From Form 8824, line 36.” Don't
Like Taylor, Finley also files a Form 8824. Finley determines that complete columns (b) through (f). If you held a qualified investment
the apartment building received from Taylor with an FMV of in a QOF at any time during the year, you must file your tax return
$220,000 contains like-kind section 1245 property with an FMV of with Form 8997 attached. See the Form 8997 instructions.
$55,000, and like-kind section 1250 property with an FMV of
$165,000. Finley enters $175,000 on line 25, the sum of lines 18 and Paperwork Reduction Act Notice. We ask for the information on
23 less line 15. Finley allocates $131,250 ($165,000/$220,000 × this form to carry out the Internal Revenue laws of the United States.
$175,000) from line 25 to the basis of the like-kind section 1250 You are required to give us the information. We need it to ensure that
property received in the exchange. Finley allocates $43,750 you are complying with these laws and to allow us to figure and
($55,000/$220,000 × $175,000) from line 25 to the basis of the collect the right amount of tax.
like-kind section 1245 property received in the exchange. Finley
reports $131,250 as the amount for line 25a and $43,750 as the You are not required to provide the information requested on a
amount for line 25b. As noted in the above example, Finley’s form that is subject to the Paperwork Reduction Act unless the form
remaining $5,000 in potential section 1250 depreciation recapture displays a valid OMB control number. Books or records relating to a
attaches to the apartment building received by Finley from Taylor, form or its instructions must be retained as long as their contents
and $5,000 of any gain recognized on the subsequent sale of this may become material in the administration of any Internal Revenue
property is recognized as ordinary income. law. Generally, tax returns and return information are confidential, as
required by section 6103.

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The time needed to complete and file this form will vary            If you have comments concerning the accuracy of these time 
depending on individual circumstances. The estimated burden for     estimates or suggestions for making this form simpler, we would be 
individual taxpayers filing this form is approved under OMB control happy to hear from you. See the instructions for the tax return with 
number 1545-0074 and is included in the estimates shown in the      which this form is filed.
instructions for their individual income tax return. The estimated 
burden for all other taxpayers who file this form is shown below.

Recordkeeping . . . . . . . . . . . . . . 11 hr., 43 min.
Learning about 
the law or the form . . . . . . . . . . . 2 hr., 34 min.
Preparing the form  . . . . . . . . . . . 2 hr., 53 min.

2024 Instructions for Form 8824                                                                                                          7

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