Tax deferral does not always mean zero recognized gain.
The IRS explains that if an exchange includes money or other property that is not like-kind, gain can be recognized to the extent of that money or other property, subject to the applicable rules. Investors commonly use the informal term “boot” when discussing this non-like-kind value.
Debt changes, closing adjustments and transaction structure can complicate the analysis. A simple “trade up and reinvest everything” slogan is not a substitute for a tax model prepared from actual basis, liabilities and closing statements.
Before closing
Ask the CPA or tax counsel to model expected realized gain, recognized gain, basis and cash consequences under the contemplated structure.