1031 Property Exchanges
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Certified / FEA

Strategic Property
Exchanges, LLC
11353 Reed Hartman Hwy.
Suite 300
Cincinnati, OH 45241

Toll Free: (800) 427-7212
Phone: (513) 412-3481
Fax: (513) 412-3482

IRS Section 1031 Exchange Explained


 

(The following is an excerpt from our 1031 Advisor newsletter located here )

Many times in analyzing the pros and cons of Section 1031 exchanges, accounting professionals will over-emphasize to a client the beneficial impact of bonus depreciation versus Section 1031 exchanges.

One aspect that must be noted, particularly in the transportation industry, is the prevalence of purchasing used trucks in decent condition, rather than purchasing new.  Used trucks or used equipment of any kind do not qualify for bonus depreciation.  Note that bonus depreciation expired as of December 31, 2009.  If it is not re-introduced as a tax deduction in 2010, the scenario in Example 1 below would never apply.

Let us take a look at the hidden tax cost in a specific example of bonus depreciation for new and used equipment versus a Section 1031 exchange.