PART VIII: Property Dispositions and Special Transactions

This part covers the transaction patterns that often turn a mostly correct tax answer into a wrong one. The main issues are whether gain or loss is recognized now, how it is characterized, and whether the relationship between the parties overrides a simpler rule.

In This Part

• Chapter 28: Nontaxable Exchanges and Involuntary Conversions covers nonrecognition and deferral frameworks.
• Chapter 29: Characterization of Gains and Losses explains why capital-versus-ordinary treatment changes the tax consequence.
• Chapter 30: Related Party Transactions addresses special rules that limit or alter normal transaction treatment.

How to Use This Part

• Read this part after the core property and entity chapters so the background rules are already familiar.
• Focus on what changes timing, character, or deductibility.
• Revisit these chapters whenever a REG miss involves property disposition or a relationship-based exception.

In this section

• Chapter 28: Nontaxable Exchanges and Involuntary Conversions
  REG property-transaction coverage for Section 1031 exchanges, Section 1033 conversions, deferred gain, and replacement basis.
  • Like-Kind Exchanges (Section 1031): Requirements and Limitations
    Learn how Section 1031 exchanges enable tax deferral through like-kind property replacement, including timelines, qualified intermediaries, partial exchanges with boot, and key compliance strategies.
  • Involuntary Conversions (Section 1033): Calculating Deferred Gains
    Explore Section 1033 involuntary conversions—covering condemnation, casualty, and theft scenarios—and learn how to calculate and defer gains by properly applying replacement rules.
  • Basis of Replacement Property
    Learn how newly acquired property’s basis is adjusted for deferred or partially recognized gains under Sections 1031 and 1033, complete with practical examples, diagrams, and key CPA Exam insights.
  • Planning Implications of Deferred Gains
    Learn how deferral can shift tax burdens and plan for future dispositions in Section 1031 exchanges, involuntary conversions, and more.
• Chapter 29: Characterization of Gains and Losses
  REG property-tax coverage for Section 1231, recapture, installment sales, and gain-or-loss character analysis.
  • Section 1231 Netting Process: Capital vs. Ordinary
    Learn how Section 1231 property gains and losses are netted, apply lookback rules, and understand when capital gains are recharacterized as ordinary—complete with step-by-step diagrams and examples.
  • Depreciation Recapture (Sections 1245, 1250)
    Deep dive into the intricacies of depreciation recapture under Sections 1245 and 1250, including key computations, real-world examples, and lookback considerations for equipment and real property.
  • Unrecaptured Section 1250 Gain and Other Special Rules
    Discover how individuals incur a special 25% rate on real estate depreciation recapture, clarifying key considerations, calculations, and IRS rules for Section 1250 gains.
  • Installment Sales and Related-Party Sales
    Explore the comprehensive mechanics of installment sales, including the gross profit ratio method, imputed interest rules, and limitations affecting related-party transactions. Learn how these provisions govern the recognition of gains, ensure fair tax treatment, and prevent abuse, all supplemented with practical examples and diagrams.
• Chapter 30: Related Party Transactions
  REG related-party coverage for attribution, loss disallowance, deferred gain, imputed interest, and family structures.
  • Attribution of Stock Ownership; Definition of Related Parties
    Explore the comprehensive rules for attributing stock ownership and defining related parties, including family and entity constructive ownership per the Internal Revenue Code.
  • Disallowance of Losses and Deferred Gains
    Explore how special IRS rules disallow losses and may defer gains in related-party transactions, preventing taxpayers from recognizing or deducting artificial losses and manipulating tax outcomes.
  • Imputed Interest and Below-Market Loans
    Explore comprehensive rules for imputed interest under IRC Section 7872, focusing on gift loans, corporate-shareholder loans, and how to calculate and report below-market interest.
  • Family Partnerships and Complex Structures
    Explore how family partnerships and complex structures present unique opportunities and challenges in tax planning, including property shifting, disguised gifts, and special allocations.