Small Business

Exchanges of partnership interests do not qualify as nontaxable exchanges of like-kind property. This applies regardless of whether they are general or limited partnership interests.

Fair market value (FMV) is the price at which the property would change hands between a buyer and a seller when both have reasonable knowledge of all the necessary facts and neither has to buy or sell.
If parties with adverse interests place a value on property in an arm's-length transaction, that is strong evidence of FMV.
If there is a stated price for services, this price is treated as the FMV unless there is evidence to the contrary.

The amount you realize from a sale or exchange is the total of all money you receive plus the fair market value (defined below) of all property or services you receive.
The amount you realize also includes any of your liabilities that were assumed by the buyer and any liabilities to which the property you transferred is subject, such as real estate taxes or a mortgage.

Properties are of like-kind, if they are of the same nature or character, even if they differ in grade or quality. Personal properties of a like class are like-kind properties.
However, livestock of different sexes are not like-kind properties.
Also, personal property used predominantly in the United States and personal property used predominantly outside the United States is not like-kind properties.
Real properties generally are of like-kind, regardless of whether the properties are improved or unimproved. However, real property in the United States and real property outside the United States are not like-kind properties.

Generally, if you exchange business or investment property solely for business or investment property of a like-kind, no gain or loss is recognized under Internal Revenue Code Section 1031.
If, as part of the exchange, you also receive other (not like-kind) property or money, gain is recognized to the extent of the other property and money received, but a loss is not recognized.
Section 1031 does not apply to exchanges of inventory, stocks, bonds, notes, other securities or evidence of indebtedness, or certain other assets.

Selling expenses should be added to the cost amount and subtracted from the gross proceeds sales amount on IRS Schedule D or Form 4797.
This will help insure that the gross proceeds figure agrees with the 1099 slip that the IRS will receive.

You may elect to report the sale on IRS Form 6252 which spreads the tax liability on the gain over the life of the installment period.
You may elect not to use the installment method if you want to report the entire profit in the current year of sale.

The long term holding period is more than one year. The short term holding period is one year or less.
The significance of this determination is that gains on long term assets benefit from lower tax rates.

Business assets are things of value that are used in a business. The assets are of two types:
Tangible assets, Cash and Receivables, Inventory like business vehicles, equipment, supplies, and buildings.
Intangible assets, like goodwill copyrights, patents, and trademarks.