Are Like-Kind Exchanges tax free?

Contrary to popular belief, like-kind exchanges, despite being considered "tax free," are not exempt from reporting requirements to the IRS.

It is essential for taxpayers to understand that every single trade conducted under a like-kind exchange must be declared to the Internal Revenue Service.

The reporting process for like-kind exchanges is facilitated through the use of Form 8824. This form serves as the official documentation for recording the details of such transactions.

Taxpayers who engage in multiple like-kind exchanges have the convenience of consolidating their reporting requirements onto a single Form 8824.

However, the specifics of each individual trade must be appended to the form in the form of an attached statement. This statement provides detailed information on the nature and extent of each transaction.