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Exchanges with CollectiblesPursuant to Treasury Regulations Section 1.1031(a)-1(c) an exchange of business or investment personal property, for other such personal property, comes within Section 1031. Unfortunately, the regulations provide little guidance on what is personal property and whether it is considered like-kind. The 1991 tax regulations provide additional guidance for determining whether personal property has been exchanged for property of like-kind (e.g., as long as the nature and character of the properties are similar). Collectibles are typically defined as artwork, stamps, antiques, antique cars, coins, precious metal, and any other personal property as specified by the Secretary of the Treasure. However, the IRS has not provided any additional guidance and it is unlikely the IRS will provide guidance in the near future. In a 1992 Field Service Advice, the IRS National Office stated they will not rule on the issue unless "forced to do so on audit." Informally the IRS has stated that artistic works within the same media or medium will be treated as like-kind. In the arts, a media or medium is a material used by an artist or designer to create a work, such as wood, concrete, plaster, glass or metal. In painting, "media" refers to both the type of paint used and the base (or ground) to which it is applied, such as oil paintings or watercolors. Whether an item of personal property may be exchanged is fact intensive. As a result, we recommend that you speak with our tax attorneys to clarify whether a particular item may be exchanged. |
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