8824 Part III: 8 Simple Lines - Why so hard to grasp?

Client sells rental property for $345,000
Adjusted Basis was $223,471
Client buys new rental in LKE for $490,000


I have:

Line 12 (FMV property given up) = $345,000
Line 14 (gain on property given up)= $345,000 [[very confusing to me - software plugs this number]]
Line 17 (FMV of property received) = $490,000
Line 18 (adjusted basis of property given up) = $233,471
Line 19 (realized gain) = $266,529
Line 23 (recognized gain)= $0
Line 24 (deferred gain) = $266,529
Line 25 = (basis of like-kind property received) = $223,471

I don't know about the form or the lines but I know this. They did not get a 490k property by only giving up one worth 345k. They "paid" consideration of another 145k, cash or mortgage. And there is no recognized gain, and a basis of 378k in the acquired property. Based on your input so far.

Did he really do a qualified LKE? From your post, it sounds as if he just sold one property and used the proceeds to buy another. Was there a QI?

Line 12 is for OTHER (non-like kind) property given up, and should be blank in this case. Look at the note on the form above this line. Common misunderstanding.

It’s not hard to grasp if you actually use the correct lines. See if you can find the phrase “other property” in Lines 12 through 14.

Thanks for the replies:

The transaction was definitely executed by an agency for the LKE, thank you for checking.

I can clearly see "other" property now, and the note in bold "ONLY". Seems so obvious in hindsight. So does Nilodop's reply.



I think I have it now!....


Client sells rental property for $345,000 (added: $35,658 in selling expenses)
Adjusted Basis was $223,471
Client buys new rental in LKE for $490,000


Line 16 (FMV of like-kind property you received) = $490,000
Line 18 (adjusted basis of property given up + net amounts paid to other party) = $332,813 (223,471+490,000-345,000-35,658)
Line 19 (realized gain) $157,187
Line 23 (recognized gain) $0
Line 24 (deferred gain) $157,187
Line 25 (basis of like kind property) $332,813