Fixed Price: Less than $500
| Posted: Jul 28, 2015 | Ends: 8d, 16h |
Not all property transferred in an exchange must be of like-kind. Other property or money can be transferred in addition, without invalidating the exchange. Such non like-kind property is called "boot". In general, boot is only taxable to the extent of the realized gain. Transactions involving boot must be very carefully structured so as not to invalidate the qualifying portion of the trade. The receipt of money or non like-kind property will cause the realized gain, if any, to be recognized to the extent of the sum of money and the fair market value of the property received. In other words, you have to pay taxes on any money or other non like-kind property you receive in an exchange. Properly configured exchanges are structured so as to eliminate or minimize boot.