Like Kind Exchange

[Randall]

For a like kind exchange, how would you input the following in ATX? Property given up is rental real estate, same as replacement property received. The property given up is included in Sch E ATX records and consists of several asset entries (land, original cost of building and 2 bldg improvement entries). In the asset records, if I use the like kind exchange option, these are carried to Form 8824 automatically but listed as four items. Do I allocate the exchange value for the four different items? But then how do I allocate the amount for the new replacement property with the adjusted basis (for the deferred gain)? I would like to show the old assets as sold at NPV with no gain and no loss. Then on Form 8824, manually input one item for the whole exchange value, leaving me one asset with a reduced adjusted basis. This will list the old assets on Form 4797 with no gain or loss. How should I show this thru the ATX?

[jainen]

>>input the following in ATX?<<

In my experience, it is extremely difficult or impossible to use software for a 1031 exchange. Unless you specialize in the subject and have become very familiar with the programmer's assumptions over many transactions, it isn't worth the learning curve. (Besides, even a specialist would never use a general tax prep program like ATX for this. It requires a high-level fixed asset manager.) Calling tech support is two or three times worse, because they will barge ahead with further assumptions not related to what you are asking!

For example, there is probably an obscure way to link the four assets in a single disposition. That single exchange value has to be allocated to land, land improvements (if applicable), and buildings. You need to use FMV for the new allocation, which is likely not available to the software. And when you try to carry forward the existing depreciation schedule, to the extent it applies within the new allocation, you will almost certainly leave tech support in the dust. And you haven't even started on the new money (sometimes disguised as mortgage debt). God help you if either sales contract mentions furnishings or appliances!

I always recommend you work everything out with pencil and paper first. Yes, it takes a couple of hours, so set your fee accordingly. Your client was perfectly willing to pay the facilitator a thousand dollars to word process a few boilerplate documents, and must understand the value of actually running the numbers. After you get it all figured out, then delete the old assets and re-enter from scratch (or otherwise use overrides).

[Randall]

(Besides, even a specialist would never use a general tax prep program like ATX for this. It requires a high-level fixed asset manager.) Calling tech support is two or three times worse, because they will barge ahead with further assumptions not related to what you are asking!

Thanks. I agree. There's no way I was going to call tech support. I know ATX is limited and I will have to appoach it as you suggest.