OUR THOUGHTS ON:

Like-Kind Exchange Repealed for Equipment - Opportunity Still Exists for Mineral Rights

Energy & Resources|Tax Reform

By Keith Donnelly

Effective after December 31, 2017, the Tax Cuts and Jobs Act repealed the favorable tax deferral treatment to company cars, drilling rigs, mining equipment and other personal property. However, the Act still allows a tax free exchange to real property that is held for use in a trade or business or held as an investment.

Even though the Act substantially limits the property that qualifies, an opportunity may still exist for the exchange of mineral and surface rights. Limited authority exists regarding the exchange of properties, however, it is generally held that exchanges of mineral rights for mineral rights, mineral rights for surface rights, and long-term lease for real estate could potentially qualify as an exchange of like-kind property.

It should be noted that a transition rule may apply to qualified personal property that is relinquished before or on December 31, 2017 and the replacement property is later acquired in accordance to the 45-day identification deadline and 180-day exchange deadline.

As companies and investors navigate through the complexities and the repeal of favorable items caused by tax reform, planning opportunities such as tax deferral of qualified property should be considered.

Please visit the Our Thoughts On...Energy and Resources blog for more articles, or contact a Schneider Downs tax advisor if you have any questions.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

comments