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Department of the Treasury
Internal Revenue Service
2023

Instructions for Form 8824

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

Section references are to the Internal Revenue Code unless like-kind exchange. Use Part III to figure the amount of gain required
otherwise noted. to be reported on the tax return in the current year if cash or property
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.
General Instructions
Certain members of the executive branch of the federal
Future developments. For the latest information about government and judicial officers of the federal government use Part
developments related to Form 8824 and its instructions, such as IV to elect to defer gain on conflict-of-interest sales. Judicial officers
legislation enacted after they were published, go to IRS.gov/ of the federal government are the following.
Form8824. 1. Chief Justice of the United States.
What’s New 2. Associate Justices of the Supreme Court.
3. Judges of the:
New Line 12a. New line 12a on 2023 Form 8824 requires you to
report a description of other (non-like-kind) property given up. See a. United States courts of appeals;
Line 12a, later. b. United States district courts, including the district courts in
New Line 15a. New line 15a on 2023 Form 8824 requires you to Guam, the Northern Mariana Islands, and the Virgin Islands;
report a description of other (non-like-kind) property received. See c. Court of Appeals for the Federal Circuit;
Line 15a, later. d. Court of International Trade;
New Lines 25a, 25b, and 25c. New lines 25a through 25c on 2023 e. Tax Court;
Form 8824 require you to report the basis allocable to sections 1250 f. Court of Federal Claims;
and 1245, and intangible property treated as real property, if
applicable. See Lines 25, 25a, 25b, and 25c, later. g. Court of Appeals for Veterans Claims;
h. United States Court of Appeals for the Armed Forces; and
Separate instructions for electronic filers. For e-filers, new lines
12a, 15a, and 25a through 25c are not available, and all information i. Any court created by an Act of Congress, the judges of which
applicable to those lines must be reported on a separate sheet are entitled to hold office during good behavior.
attached to their Form 8824.
Multiple exchanges. If you made more than one like-kind
Reminders exchange, you can file a summary on one Form 8824 and attach
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
Special rules for capital gains invested in qualified opportunity return for that year. Also file Form 8824 for the 2 years following the
funds (QOFs). Effective December 22, 2017, section 1400Z-2 year of a related party exchange. See Line 7, later, for details.
provides a temporary deferral of inclusion in gross income for capital
gains invested in QOFs, and permanent exclusion of capital gains Like-Kind Exchanges (Form 8824:
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.
Form 8824 figures the amount of gain deferred as a result of a Section 1031 doesn’t apply to exchanges of real property held
primarily for sale. See section 1031(a)(2). In addition, section 1031

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doesn't apply to certain exchanges involving tax-exempt use Property affixed to or integrated into real property. If tangible
property subject to a lease. See section 470(e)(4). property is permanently affixed to real property and will ordinarily
Like-kind property. Properties are of like kind if they are of the remain affixed for an indefinite period of time, the property is
same nature or character, even if they differ in grade or quality. generally an inherently permanent structure and real property for
section 1031 purposes, regardless of the use or purpose of the
Generally, real properties are like-kind properties, regardless of property or whether it contributes to the production of income. In
whether they are improved or unimproved properties. addition, a structural component is real property for section 1031
Property classified as real property under one of the definitions in purposes if it is a constituent part of, and integrated into, an
the final regulations discussed above may be like-kind to other real inherently permanent structure, regardless of whether the structural
property defined under another definition in the regulations. 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 a deferred exchange to qualify as like kind,
you must comply with the timing requirements for identification and
Tangible property. Tangible property is real property for purposes receipt of replacement property. The replacement property for the
of section 1031 if it meets any of the following. exchange must be identified within 45 days after the property being
• On the date it is transferred in an exchange, the property is given up is transferred. The replacement property must be received
classified as real property under the law of the state or local within 180 days, or by the due date of the tax return (including
jurisdiction in which the property is located. See Regulations section extensions), whichever is earlier. See the instructions for Line 5 and
1.1031(a)-3(a)(6) and Intangible property next. Line 6, later, for more details.
• The property is specifically listed as real property in Regulations
section 1.1031(a)-3. See Stock that is real property, later. If you make a deferred exchange using a qualified intermediary
• The property is considered real property based on all the facts (QI), the transfer of the property given up and receipt of like-kind
and circumstances under the various factors provided in Regulations property is treated as a like-kind exchange. If you fail to meet the
section 1.1031(a)-3(a)(2). See Property affixed to or integrated into timing requirements because of the QI, your transaction won't qualify
real property, later. as a deferred exchange and any gain may be taxable in the year you
transferred the property. However, if the QI defaults on its obligation
Each distinct asset is separately analyzed from any other distinct to acquire and transfer replacement property because of bankruptcy
asset to which it relates for purposes of determining whether the or receivership proceedings and you meet certain requirements, you
asset is real property under section 1031. See Regulations section may be able to report the gain in the year or years payments are
1.1031(a)-3(a)(4). received. For the requirements, see Rev. Proc. 2010-14, 2010-12
Intangible property. Intangible property is real property for I.R.B. 456, available at IRS.gov/irb/2010-12_IRB#RP-2010-14.
purposes of section 1031 if it meets any of the following, subject to Related parties and agents of the taxpayer aren’t eligible to be QIs,
the exceptions provided in Intangible property that is never real and are referred to as “disqualified persons.” For more information on
property under section 1031 next. QIs and disqualified persons, see Pub. 544, chapter 1.
• On the date it is transferred in an exchange, the property is The QI exchange constitutes one safe harbor. For more
classified as real property under the law of the state or local TIP details on QI exchanges and for a discussion of other safe
jurisdiction in which the property is located. harbors, see Pub. 544.
• It is specifically listed in Regulations section 1.1031(a)-3 as real
property. Incidental personal property. For deferred like-kind exchanges
• It derives its value from real property or an interest in real property involving a QI, personal property that is incidental to replacement
and is inseparable from that real property or interest in real property real property (incidental personal property) is disregarded in
(for example, an easement or an option to acquire real property). determining whether a taxpayer's rights to receive, pledge, borrow,
See Regulations section 1.1031(a)-3(a)(5). or otherwise obtain the benefits of money or non-like-kind property
Intangible property that is never real property under section held by the QI are expressly limited, as provided in Regulations
1031. The following assets are exceptions and not real property for section 1.1031(k)-1(g)(6) and (7).
purposes of section 1031, regardless of the classification of the Personal property is incidental to real property acquired in an
property under state or local law. exchange if:
• Stock (other than the type of stock described in Stock that is real • In standard commercial transactions, the personal property is
property next), bonds, or notes. typically transferred together with the real property; and
• Other securities or evidences of indebtedness or interest. • The aggregate fair market value (FMV) of the incidental personal
• Interests in a partnership (other than an interest in a partnership property transferred with the real property doesn’t exceed 15% of the
that has in effect a valid election under section 761(a) to be excluded aggregate FMV of the replacement real property or properties
from the application of all of subchapter K). received in the exchange (15% limitation). See Regulations section
• Certificates of trust or beneficial interests. 1.1031(k)-1(g)(7).
• Choses in action.
Exchange with a related party. Special rules limit nonrecognition
Stock that is real property. The following stock is listed in for an exchange with a related party. See Line 7, later.
Regulations section 1.1031(a)-3 as real property for section 1031
purposes. Multi-Asset Exchanges
• Stock in a cooperative housing corporation.
• Shares in a mutual ditch, reservoir, or irrigation company A multi-asset exchange involves the transfer and receipt of more
described in section 501(c)(12)(A) if, at the time of the exchange, than one group of like-kind properties. The transfer or receipt of
such shares have been recognized by the highest court of the state multiple properties within one like-kind group is also a multi-asset
in which the company was organized, or by a state statute, as exchange. However, an exchange of a single piece of land, a
constituting or representing real property or an interest in real vehicle, and cash for a single piece of land and a vehicle isn’t a
property. multi-asset exchange because, of the assets transferred, section
1031 may apply only to the exchange of the land for other land.

2 2023 Instructions for Form 8824

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

2023 Instructions for Form 8824 3

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An exchange structured to avoid the related party rules isn't a Line 14. The gain or (loss) from the other property given up is
like-kind exchange. Don't report it on Form 8824. Instead, you figured on line 14 and must be reported on your tax return. Report
should report the disposition of the property given up as if the gain or (loss) as if the exchange were a sale.
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 Lines 15 and 15a. Include on line 15 the sum of:
exchange for property you received that was formerly owned by a • Any cash paid to you by the other party;
related party if the related party received cash or other • The FMV of other (non-like-kind) property you received, if any;
(non-like-kind) property for the property you received, and you used and
the QI intermediary to avoid the application of the related party rules. • Net liabilities assumed by the other party—the excess, if any, of
See Rev. Rul. 2002-83 for more details. You can find Rev. Rul. liabilities (including mortgages) assumed by the other party over the
2002-83 on page 927 of Internal Revenue Bulletin 2002-49 at total of (a) any liabilities you assumed, (b) cash you paid to the other
IRS.gov/pub/irs-irbs/irb02-49.pdf. party, and (c) the FMV of the other (non-like-kind) property you gave
up.
If, after the exchange, you own replacement property that a Line 15a. On line 15a, enter a description of the other
! related party sold into the exchange for cash, or other (non-like-kind) property received.
CAUTION (non-like-kind) property, through an unrelated party such as
a QI, don't report the transaction on Form 8824 unless one of the E-filers don’t have line 12a, 15a, or 25a through 25c on their
exceptions on line 11 applies. Instead, report the disposition of the ! Form 8824. E-filers must attach a separate sheet to their
property given up as if the exchange had been a sale. CAUTION Form 8824 on which they will report information for those
lines. They should write at the top of the sheet, their name and
If you met one of the exceptions on line 11, and you or the related identifying number as they appear on the Form 8824.
party (either directly or indirectly) dispose of property received in an
exchange before the date that is 2 years after the last transfer that Reduce the sum of the above amounts (but not below zero) by
was part of the exchange, the deferred gain or (loss) from line 24 any exchange expenses you incurred.
must be reported on your tax return for the year of disposition The following rules apply in determining the amount of liability
(unless an exception on Form 8824, line 11, applies). treated as assumed.
The running of the 2-year holding period will be tolled for any • A recourse liability (or portion thereof) is treated as assumed by
the party receiving the property if that party has agreed to and is
! period during which your risk of loss is substantially expected to satisfy the liability (or portion thereof). It doesn't matter
CAUTION reduced. See Two-year holding period in Pub. 544.
whether the party transferring the property has been relieved of the
If you are filing this form for 1 of the 2 years following the year of liability.
the exchange, complete Parts I and II. If both lines 9 and 10 are “No,” • A nonrecourse liability is generally treated as assumed by the
stop. You don't have to complete Part III. party receiving the property subject to the liability. However, if an
owner of other assets subject to the same liability agrees with the
If either line 9 or line 10 is “Yes,” and an exception on line 11 party receiving the property to, and is expected to, satisfy part or all
applies, check the applicable box on line 11, attach any required of the liability, the amount treated as assumed is reduced by the
explanation, and stop. If none of the exceptions on line 11 apply, smaller of (a) the amount of the liability that the owner of the other
complete Part III. Report the deferred gain or (loss) from line 24 on assets has agreed to and is expected to satisfy, or (b) the FMV of
this year's tax return as if the exchange had been a sale. those other assets.
Lines 11a through 11c. The line 11 exceptions are in Form 8824 Line 18. Include on line 18 the sum of:
on lines 11a through 11c. These are the exceptions. • The adjusted basis of the like-kind real property you gave up;
• Line 11a. The disposition was after the death of either party. • Exchange expenses, if any (except for expenses used to reduce
• Line 11b. The disposition was an involuntary conversion and the the amount reported on line 15); and
threat of conversion occurred after the exchange. • The net amount paid to the other party—the excess, if any, of the
• Line 11c. You can establish to the satisfaction of the IRS that total of (a) any liabilities you assumed, (b) cash you paid to the other
neither the disposition nor the exchange had tax avoidance as one party, and (c) the FMV of the other (non-like-kind) property you gave
of its principal purposes. up over any liabilities assumed by the other party.
Line 11c. If you believe that you can establish to the satisfaction
of the IRS that tax avoidance wasn’t a principal purpose of both the Figuring amounts for lines 15 through 20. See Regulations
exchange and the disposition, attach an explanation. Generally, tax section 1.1031(d)-2 and the following example for figuring amounts
avoidance won't be seen as a principal purpose in the case of: to enter on lines 15 through 20.
• A disposition of property in a nonrecognition transaction, Example. Taylor owns an apartment house with an FMV of
• An exchange in which the related parties derive no tax advantage $220,000, with an adjusted basis of $100,000, and that is subject to
from the shifting of basis between the exchanged properties, or a mortgage of $80,000. Finley owns an apartment house with an
• An exchange of undivided interests in different properties that FMV of $250,000, with an adjusted basis of $175,000, and that is
results in each related party holding either the entire interest in a subject to a mortgage of $150,000.
single property or a larger undivided interest in any of the properties. Taylor transfers Taylor’s apartment house to Finley and receives
Lines 12, 12a, 13, and 14. Lines 12 and 12a should be completed in exchange Finley's apartment house plus $40,000 cash. Taylor
if other property that doesn't qualify as like-kind property was part of assumes the mortgage on the apartment house received from
the exchange, in addition to the like-kind property. On line 12, enter Finley, and Finley assumes the mortgage on the apartment house
the FMV of the other (non-like-kind) property that was given up. received from Taylor.
Line 12a. On line 12a, enter a description of the other Taylor files the Form 8824 on paper. Taylor enters on line 15 of
(non-like-kind) property given up. the Form 8824 only the $40,000 cash received from Finley, and, on
line 15a, enters the description of the other (non-like-kind) property
E-filers don’t have line 12a, 15a, or 25a through 25c on their received. The $80,000 of liabilities assumed by Finley isn't included
! Form 8824. E-filers must attach a separate sheet to their because it doesn't exceed the $150,000 of liabilities Taylor assumed.
CAUTION Form 8824 on which they will report information for those
Taylor enters $250,000 on line 16, the FMV of the apartment house
lines. They should write at the top of the sheet, their name and received from Finley. Taylor enters $290,000 on line 17, the sum of
identifying number as they appear on the Form 8824. lines 15 and 16. Taylor enters $170,000 on line 18—the $100,000
Line 13. On line 13, enter the adjusted basis of the other property adjusted basis, plus the $70,000 excess of the liabilities Taylor
given up. assumed over the liabilities assumed by Finley ($150,000 -
$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 1.1031(a)-3 of the regulations, Taylor determines that the
$40,000 on line 20, the lesser of line 15 or line 19. section 1245 assets are real property for section 1031 like-kind
Finley files Finley’s Form 8824 on paper. Finley enters $30,000 exchange treatment. Additionally, Taylor determines that the total
on Finley’s Form 8824, line 15—the excess of the $150,000 of depreciation allowed or allowable on the section 1245 property is
liabilities assumed by Taylor, over the sum of the $80,000 of liabilities $35,000. Taylor determines ordinary income under the section 1245
assumed from Taylor and the $40,000 cash Finley paid Taylor depreciation recapture rules by comparing the $35,000 total
($120,000). On line 15a, Finley writes “liabilities and cash.” Finley depreciation allowed or allowable on the section 1245 property, to
enters $220,000 on line 16, the FMV of the apartment house the $40,000 gain, plus an allocable portion of the FMV of the section
received from Taylor. Finley enters $250,000 on line 17, the sum of 1250 property received and enters $35,000 (the smaller amount) on
lines 15 and 16. Finley enters on line 18 only the adjusted basis of line 21. Taylor subtracts line 21 from line 20 and enters $5,000 on
$175,000, because the total of the $80,000 of liabilities Finley line 22. Taylor enters the sum of lines 21 and 22, $40,000, on line 23.
assumed from Taylor and the $40,000 cash Finley paid Taylor Taylor subtracts line 23 from line 19 and enters the deferred gain on
doesn't exceed the $150,000 of liabilities assumed by Taylor. Finley the exchange, $80,000, on line 24.
subtracts line 18 from line 17 and enters the $75,000 in gain realized Assume that Finley didn’t previously allocate the basis in Finley’s
on line 19. Finley enters $30,000 on line 20, the lesser of line 15 or apartment house for depreciation purposes under section 168, so
line 19. the apartment house doesn’t contain any like-kind section 1245
property for section 1031 purposes. Finley enters $0 on line 21 as
Line 21. If you disposed of section 1245, 1250, 1252, 1254, or 1255 there is no ordinary income from depreciation recapture. Finley
property (see the instructions for Part III of Form 4797), you may be subtracts line 21 from line 20 and enters $30,000 on line 22. Finley
required to recapture as ordinary income part or all of the realized enters the sum of line 21 and line 22, $30,000, on line 23. Finley
gain (line 19). Figure the amount to enter on line 21 as follows. subtracts line 23 from line 19 and enters the deferred gain on the
Section 1245 real property. Enter the smaller of: exchange, $45,000, on line 24.
1. The total adjustments for deductions (whether for the same
or other property) allowed or allowable to you or any other person for Lines 25, 25a, 25b, and 25c. The amount on line 25 is your basis
depreciation or amortization (up to the amount of gain shown on in the like-kind property you received in the exchange. Your basis in
line 19); or other property (non-like-kind) received in the exchange, if any, is its
FMV.
2. The gain shown on line 20, if any, plus the FMV of Lines 25a, 25b, and 25c. If you received section 1250 property,
non-section 1245 like-kind property received. section 1245 property, and/or intangible property that is like-kind
Section 1250 property. Enter the smaller of: property in the exchange, you must complete line 25a, 25b, and/or
25c, whichever are applicable.
1. The gain you would have had to report as ordinary income On line 25a, enter the amount from line 25 that is allocated to the
because of additional depreciation if you had sold the property (see •
like-kind section 1250 property received in the exchange.
the Form 4797 instructions for line 26); or On line 25b, enter the amount from line 25 that is allocated to the
•
2. The larger of: like-kind section 1245 property received in the exchange.
a. The gain shown on line 20, if any; or • On line 25c, enter the amount from line 25 that is allocated to the
b. The excess, if any, of the gain in item 1 above over the FMV like-kind intangible property received in the exchange.
of the section 1250 property received. Amounts entered on lines 25a, 25b, and 25c must be
proportionate to their FMVs.
Section 1252, 1254, and 1255 property. The rules for these
types of property are similar to those for section 1245 property. See E-filers don't have line 12a, 15a, or 25a through 25c on their
Regulations sections 1.1252-2(d) and 1.1254-2(d) and Temporary ! Form 8824. E-filers must attach a separate sheet to their
Regulations section 16A.1255-2(c) for details. If the installment CAUTION Form 8824 on which they will report information for those
method applies to this exchange: lines. They should write at the top of the sheet, their name and
identifying number as they appear on the Form 8824.
1. See section 453(f)(6) to determine the installment sale
income taxable for this year and report it on Form 6252; Example. Referring to the facts in the examples for lines 15
2. Enter on Form 6252, line 25 or 36, the section 1252, 1254, or through 24, Taylor determines the apartment house received from
1255 recapture amount you figured on Form 8824, line 21—don't Finley contains only like-kind section 1250 property and no section
enter more than the amount shown on Form 6252, line 24 or 35; 1245 property and no intangible property treated as section 1031
like-kind property. Taylor subtracts line 15 from the sum of lines 18
3. Also enter this amount on Form 4797, line 15; and and 23 and enters $170,000 on line 25. Taylor allocates the entire
4. If all the ordinary income isn't recaptured this year, report in $170,000 to the basis of the like-kind section 1250 property received
future years on Form 6252 the ordinary income up to the taxable in the exchange. This time, Taylor e-files Form 8824. Taylor will
installment sale income, until it is all reported. attach a separate sheet to the Form 8824 reporting the $170,000 for
line 25a.
Line 22. Report a gain from the exchange of property used in a Like Taylor, this time Finley e-files Finley’s Form 8824. Finley
trade or business (and other noncapital assets) on Form 4797, line 5 determines that the apartment house received from Taylor with an
or line 16. Report a gain from the exchange of capital assets FMV of $220,000 contains like-kind section 1245 property with an
according to the Schedule D instructions for your tax return. Be sure FMV of $55,000, and like-kind section 1250 property with an FMV of
to use the date of the exchange as the date for reporting the gain. If $165,000. Finley enters $175,000 on line 25, the sum of lines 18 and
the installment method applies to this exchange, see section 453(f) 23 less line 15. Finley allocates $131,250 ($165,000/$220,000 ×
(6) to determine the installment sale income taxable for this year and $175,000) of line 25 to the basis of the like-kind section 1250
report it on Form 6252. property received in the exchange. Finley allocates $43,750
Line 24. If line 19 is a loss, enter it on line 24. Otherwise, subtract ($55,000/$220,000 × $175,000) to the basis of the like-kind section
the amount on line 23 from the amount on line 19 and enter the 1245 property received in the exchange. Because Finley is filing
result. For exchanges with related parties, see Line 7, earlier. electronically, Finley attaches to Finley’s Form 8824 a separate
sheet on which Finley reports $131,250 as the amount for line 25a
Figuring amounts for lines 21 through 24. See the following and $43,750 as the amount for line 25b.
example for figuring the amounts to enter on lines 21 through 24.
Example. In addition to the facts in the example for lines 15
through 20, assume that Taylor previously allocated a portion of the
basis in Taylor’s apartment house for depreciation purposes under
section 168 to assets that are section 1245 property. Applying

2023 Instructions for Form 8824 5

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3. Report the amount from line 35 on Form 4797, line 10, in
Section 1043 Conflict-of-Interest column (g). In column (a), enter “From Form 8824, line 35.” Don't
Sales (Part IV) complete columns (b) through (f).
If you, as an eligible person, sell property at a gain according to a Line 36. If you sold a capital asset, enter any capital gain from
certificate of divestiture issued by the Office of Government Ethics line 36 on your Schedule D (Form 1040). If you sold property used in
(OGE) or the Judicial Conference of the United States (or its a trade or business (or any other asset for which the gain is treated
designee) and purchase replacement property (permitted property), as ordinary income), report the gain on Form 4797, line 2 or line 10,
you can elect to defer part or all of the realized gain. You must in column (g). In column (a), write “From Form 8824, line 36.” Don't
recognize gain on the sale only to the extent that the amount realized complete columns (b) through (f). If you held a qualified investment
on the sale is more than the cost of replacement property purchased in a QOF at any time during the year, you must file your tax return
during the 60-day period beginning on the date of such sale. (You with Form 8997 attached. See the Form 8997 instructions.
must also recognize any ordinary income recapture.) Permitted
property is any obligation of the United States or any diversified Paperwork Reduction Act Notice. We ask for the information on
investment fund approved by the OGE. “Eligible persons” includes this form to carry out the Internal Revenue laws of the United States.
an officer or employee of the executive branch, or a judicial officer of You are required to give us the information. We need it to ensure that
the federal government, but not a special government employee you are complying with these laws and to allow us to figure and
defined in 18 U.S.C. section 202. “Eligible persons” also includes collect the right amount of tax.
any spouse, minor, or dependent child whose ownership of any
property is attributable to such an officer or employee. You are not required to provide the information requested on a
If the property you sold was stock you acquired by exercising form that is subject to the Paperwork Reduction Act unless the form
TIP a statutory stock option, you may be treated as meeting the displays a valid OMB control number. Books or records relating to a
holding period requirements that apply to such stock, form or its instructions must be retained as long as their contents
regardless of how long you actually held the stock. This may benefit may become material in the administration of any Internal Revenue
you if you don't defer your entire gain, because it may allow you to law. Generally, tax returns and return information are confidential, as
treat the gain as a capital gain instead of ordinary income. For required by section 6103.
details, see section 421(d) or Pub. 525, Taxable and Nontaxable
Income. The time needed to complete and file this form will vary
depending on individual circumstances. The estimated burden for
Complete Part IV of Form 8824 only if the cost of the replacement individual taxpayers filing this form is approved under OMB control
property is more than the basis of the divested property and you number 1545-0074 and is included in the estimates shown in the
elect to defer the gain. Otherwise, report the sale on your instructions for their individual income tax return. The estimated
Schedule D (Form 1040) or Form 4797, whichever applies. burden for all other taxpayers who file this form is shown below.
Your basis in the replacement property is reduced by the amount
of the deferred gain. If you made more than one purchase of Recordkeeping . . . . . . . . . . . . . . 11 hr., 43 min.
replacement property, reduce your basis in the replacement property Learning about
in the order you acquired it. the law or the form . . . . . . . . . . . 2 hr., 34 min.
Line 30. Enter the amount you received from the sale of the Preparing the form . . . . . . . . . . . 2 hr., 53 min.
divested property, minus any selling expenses.
Line 35. Follow these steps to determine the amount to enter.
1. Use Part III of Form 4797 as a worksheet to figure ordinary If you have comments concerning the accuracy of these time
income under the recapture rules. estimates or suggestions for making this form simpler, we would be
2. Enter on Form 8824, line 35, the amount from Form 4797, happy to hear from you. See the instructions for the tax return with
line 31. Don't attach the Form 4797 used as a worksheet to your tax which this form is filed.
return.

6 2023 Instructions for Form 8824

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