Tax-Free Exchanges of Aircraft Under Section 1031

Multi-Party Exchanges
Under Section 1031
© 1999 KEITH G. SWIRSKY

In many circumstances, neither the prospective purchaser (B) nor the prospective seller (C) may be willing to engage in an exchange. In such case, the transaction will also involve:The original intent of the like-kind exchange statute was to provide for the tax-free treatment of an exchange of properties between two parties. Today, however, it is accepted that the person from whom a taxpayer receives the replacement property need not be the same person to whom the taxpayer surrenders the relinquished property. One may engage in a tax-free like-kind exchange that involves three or even four parties. A three-party exchange involves:

1. a taxpayer (A) who owns property that he wishes to dispose of,

2. a prospective purchaser (B) of the taxpayer's property, and

3. a prospective seller (C) of the replacement property which the taxpayer wishes to acquire.


4. a fourth-party (D) who will, for a fee, serve as an intermediary. In a four-party exchange, (D) will (i) acquire the relinquished property from (A), (ii) sell that property to (B), (iii) acquire the replacement property from (C), and (iv) transfer it to (A).

The Regulations prescribe specific procedures for three- and four-party exchanges to ensure that such transactions qualify for tax-free treatment.

AGE BEFORE BEAUTY! And what a beauty this 1979 King Air A100 is. With 13,455.0 Total airframe hours, you could say she has been around the block a time or two. Except with aircraft that just means RELIABLE. This KA A100 has 15,437 total landings and is priced to move. You can checkout the spec sheet by clicking the link provided. Download Spec Sheet

For more information about this aircraft please call at (561) 686-7944 or email us at ron@aircraftinvestmentgroup.com.

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