The following diagnostic is generating:
Disposition # {PrefixNum} : Under the newly enacted "Tax Cuts and Jobs Act", like kind exchanges completed after December 31, 2017 are limited to exchanges of real property that are not primarily held for resale. A transition rule does provide relief for a transaction if the property given is disposed of, or if the replacement property is received prior to January 1, 2018. Please review the disposition to confirm it qualifies as a like kind exchange under the new law. If not, the disposition should be entered as a normal disposition and not like kind exchange.
Solution:
Check Schedule K>23 dispositions (D, 4797, etc.). Review the disposition(s) to confirm it qualifies as a like kind exchange.
Like-Kind Exchanges Tax reform means that like-kind exchanges are now more limited. Exchanges of real property not held primarily for sale, including machinery, equipment, vehicles and intangible property, no longer qualify for tax-deferred treatment of capital gains. Now, when a taxpayer trades a piece of equipment for another piece of equipment, the trade-in value given for the old equipment will be reflected as the sales price, along with depreciation recapture; in addition, the full purchase price will qualify for bonus depreciation and sec. 179.
