1.
Like-Kind Exchange Treatment,
Do you like it, or dislike it in theory? What do you think would be its biggest advantage and
disadvantage in practice.
Solution
Like Kind theory is a tax deferral treatment that allows disposing an asset in exchange or
acquisition of similar asset. The purpose is to not generate tax liability instead it is deferred due
to another bought asset.
Government mainly allows it in real estate transactions.
I like the theory because it helps companies to invest in like kind assets and also encourage them
in capital investments like real estate because of tax benefits.
Biggest advantage is capital tax benefits and disadvantage is deferred tax generation for
government