TAX & BASIS
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Deferred gain
Also called: unrecognized gain · tax-deferred gain
Gain that is not recognized currently because qualifying exchange treatment applies.
What it means in practice.
Deferred gain is generally embedded in the basis of the replacement property rather than permanently erased. Later transactions can cause that deferred tax to become relevant.
Why it matters.
“Tax-deferred” is more accurate than “tax-free.”
Additional notes.
Deferred gain is generally embedded in the basis of the replacement property rather than permanently erased. Later transactions can cause that deferred tax to become relevant.
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