Thank you. After review of your tax return, the following guidance is provided. Both properties must be held for use in a trade or business or for investment (see the fact sheet below). This was not checked in your tax file so I want to confirm it is true.
The 8824 is simply showing the exchange of the asset and that you have no taxable gain on the 1031 exchange in 2024. I agree it shouldn't need to be entered on line 25(a) because it is not Section 1250 property, in fact it is Section 1231 property. Since this is deferred and not taxed in the current year, there is no harm in putting it on Line 25(a) so that you can complete your tax return.
When you do sell it without using a 1031 like kind exchange you will report it as Section 1231 which does have a more favorable tax treatment. If, in fact, this is land, then there is no depreciation and it will be reported as Section 1231 at that time without reference to Section 1250 property. If the previous statement is true in your situation, and you have no building or depreciation to recapture at a future sale then you can complete the return with the instructions provided. Keep a note with your tax file so you are clear in the future year of sale.
@rcvilla
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