Taxable Exchange

Exchanges of dissimilar property, such as exchanging a car for land, are generally recognized in full. Exchanges can also include the receipt of money. Any gain or loss is calculated the same as for a sale.

GAAP/Internal Books

The Internal and user-defined books default to Yes for all disposal dates and property types under a Taxable Exchange. For financial purposes, avoid/defer recognizing the gain/loss on the exchanged asset by going to the Disposal Calculation section of the Disposal dialog and choose “No” or “Defer” in the “Recognize?” drop down for your Internal and/or user-defined book(s).

Tax Books

Exchanges of personal and amortizable property which qualified as like-kind exchanges prior to 2018 are treated as taxable exchanges in 2018 and later.

For personal property (types P,A,T,Q) and amortizable property (Z), disposed after 2017, it is recommended to use the Taxable Exchange disposal method. The system defaults the option to recognize the gain or loss to Yes for the tax books (Tax, State, AMT, and ACE).

For information on Like-Kind Exchanges, see Like-Kind Exchanges and Involuntary Conversions Overview, including the More Information section for links to additional topics.