Reform Guidance - Like-kind Exchanges of Personal Property

NOTICE: On May 16, 2019, Governor Reynolds signed Iowa House File 779, which in part extended the ability to elect deferral of gain or loss on like-kind exchanges of personal property during tax year 2019 to corporations (including S-corporations) and financial institutions.  This modifies statutory changes enacted in 2018 which only applied this elective treatment for tax year 2019 to individuals, estates or trusts, or pass-through entities other than corporations or financial institutions.  This election has now been extended to all taxpayers for tax year 2019.

This guidance was updated on June 25, 2019, to reflect these changes.   

On December 22, 2017, President Donald Trump signed Public Law 115-97, commonly referred to as the Tax Cuts and Jobs Act (TCJA). This law repealed the deferral of gain or loss from exchanges of like-kind personal property held for productive use in a business or for investment under Internal Revenue Code (IRC) section 1031. 

The repeal generally applies to exchanges completed after December 31, 2017, unless the taxpayer began the exchange by transferring property or receiving replacement property on or before that date. The deferral of gain or loss from like-kind exchanges previously applied to both real and personal property. For federal tax purposes, the deferral of gain or loss under IRC section 1031 now only applies to exchanges of like-kind real property not held primarily for sale.