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The Code The Code
Providing for the exchange of property held for productive use in a trade or business or for investment, reads as follows:
Nonrecognition of Gain or Loss From Exchanges Solely in Kind -- No gain or loss shall be recognized if property held for productive use in trade or business or for investment (not including stock in trade or other property held primarily for sale, nor stocks, bonds, notes, chooses in action, certificates of trust or beneficial interest, or other securities or evidences of indebtedness or interest) is exchanged solely for property of a like kind to be held either for productive use in trade or business or for investment.
Gain From Exchanges Not Solely in Kind -- If an exchange would be within the provision of subsection (a), of section 1035 (a), of section 1036 (a), or of section 1037 (a), if it were not for the fact that the property received in exchange consists not only of property permitted by such provisions to be received without the recognition of gain, but also of other property or money, then the gain, if any, to the recipient shall be recognized, but in an amount not in excess of the sum of such money and the fair market value of such other property.
Loss From Exchanges Not Solely in Kind -- If an exchange would be within the provisions of the subsection (a), of section 1035(a), of section 1036(a), or of section 1037(a), if it were not for the fact that the property received in exchange consists not only of property permitted by such provisions to be received without the recognition of gain or loss, but also of other property or money, then no loss from the exchange shall be recognized.
Basis-- If property was acquired on an exchange described in this section, section 1035(a), section 1036(a), or of section 1037(a), then the basis shall be the same as that of the property exchanged, decreased in the amount of any money received by the taxpayer and increased in the amount of gain or decreased in the amount of loss to the taxpayer that was recognized on such exchange
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