capital gains

[Wonder Wart Hog]

I sold an investment property.  In order to avoid paying capital gains taxes on the property, I plan on buying some equipment for my business.  Do I have to pay cash this year in order to get the capital gains loss, or may I just take possession of the equipment and pay it out?

[tagteam]

You cannot avoid any capital gain tax due as a result of the sale of your investment property by using the proceeds to purchase different property (such as equipment for your business). You would have needed to do a Section 1031 exchange which, among other requirements, cannot be done after the fact.

Of course, you can list the equipment you purchase for your business as an asset (or assets) and take depreciation (or other deductions, such as Section 179 deductions), but you will have to report the sale of your investment property and pay any capital gain tax due on the sale thereof.