Jim Junction purchased a truck for business on November 17, 2009, for $40,000. On July 21, 2010, he exchanged the truck for another truck in like-kind exchange. The new truck had a fair market value of $42,000. When does the holding period on the new truck begin and what is its basis?
IRC section 1231(a)(1) states that "No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment. " IRC section 1231(d) states that ...
After citing and discussing the Internal revenue Code provisions regarding the holding period and basis in like-kind property, this solution illustrates how to apply the law.