The Definition of Real Property Under Section 1031: Comparing the Final and Proposed Regulations
Author: Aaron S. Gaynor.
Source: Volume 38, Number 03, Spring 2021 , pp.57-61(5)
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Abstract:
The final regulations defining real property for purposes of Section 1031 preserved the general structure and principles of the proposed regulations. However, the final regulations made several substantial changes from the proposed regulations. Notably, the final regulations eliminated the much criticized “purpose and use test,” which excluded machinery and other real property with an “active” function from the definition of real property. Additionally, the final regulations now largely permit state law treatment of property as real property to be sufficient for purposes of Section 1031.Keywords: IRC Sec. 1031; T.D. 9935, exchange, purpose or use test, “real property,” like-kind
Affiliations:
1: Roberts & Holland LLP.