sec 1031 like kind exchange

[rohnnk]

why does the instructions for like kike exchange say "you will account for this deferred gain when you dispose of this property..."? that is why we have a deferred gain = we sold the relinquished property, we aren't going to sell it again. please explain.

[Mike9241]

the deferred gain reduced the basis of the acquired property. if this is sold in a non 1031 transaction, the deferred gain will be recognized.  1031 merely defers taxation 

[rohnnk]

the property has already been sold, I cant sell it again.

[M-MTax]

why does the instructions for like kind exchange say "you will account for this deferred gain when you dispose of this property..."?

You will account for the deferred gain when you sell the replacement property.

[rohnnk]

ok that makes sense, the instructions could be a little clearer.