Section 1031 Exchanges: Form 8824 and Installment Sales

Categories: Federal Tax, IRS CE
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About Course

This self-study course provides enrolled agents, CPAs, and tax return preparers with a practical understanding of two powerful tax deferral strategies — §1031 like-kind exchanges and §453 installment sales. You will work through the mechanics of both tools, learn how they interact in complex transactions, and apply the rules practitioners encounter most frequently in real estate and business disposition planning.

The course covers the like-kind standard for real property under post-TCJA rules, boot recognition and basis calculations, qualified intermediary requirements, the 45-day identification deadline and the three-property rule, the 180-day exchange period and its interaction with tax return filing deadlines, related-party restrictions under §1031(f), and Form 8824 reporting. The installment sales section addresses gross profit ratio calculations, depreciation recapture under §1245 and §1250, imputed interest under §483 and §1274, related-party resale acceleration under §453(e), and the §453A pledge rule.

Participants who pass the final examination with a score of 70% or higher will receive a Certificate of Completion awarding 2 CE credit hours in Federal Tax Law Topics — recognized by the IRS for Enrolled Agents, CPAs, AFSP participants, and other registered tax return preparers. CE credits are reported to the IRS upon course completion.

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What Will You Learn?

  • Apply the requirements for valid Section 1031 like-kind exchanges.
  • Complete and understand Form 8824 reporting.
  • Calculate realized, recognized, and deferred gain.
  • Apply Section 453 installment sale rules and gross profit ratio calculations.
  • Identify depreciation recapture and related-party limitations.
  • Evaluate practical tax planning strategies involving exchanges and installment sales.

Course Content

Module 1 – §1031 Like-Kind Exchange Fundamentals
This module establishes the foundation of §1031 like-kind exchanges. You will learn how to identify qualified real property, calculate realized and recognized gain, determine the three types of boot and their tax consequences, and compute the adjusted basis of replacement property using both the FMV method and the cost basis method.

  • §1031 Like-Kind Exchange Fundamentals

Module 2 – §1031 Exchange Mechanics: Deadlines, Intermediaries, and Form 8824
This module covers the procedural mechanics of a valid §1031 exchange. You will work through qualified intermediary requirements, disqualified persons, the 45-day identification deadline and its three-property and 200% rules, the 180-day exchange period and its interaction with the tax return filing deadline, related-party restrictions under §1031(f), and the step-by-step completion of Form 8824.

Module 3 – §453 Installment Sales: Gross Profit Ratio and Recapture Rules
This module examines the §453 installment method of reporting gain. You will calculate the gross profit ratio and installment sale income, distinguish §1245 recapture recognized as ordinary income in the year of sale from unrecaptured §1250 gain taxed at a maximum 25% rate, apply the imputed interest rules under §483 and §1274, and navigate the related-party resale acceleration rule under §453(e) and the §453A pledge rule.

Module 4 – Integrated Planning: Combining §1031 and §453 Strategies
This module integrates §1031 exchange mechanics with §453 installment sale treatment in complex multi-step transactions. You will analyze scenarios where a seller-financed installment note is used as boot, apply §1245 recapture carryover rules in pure exchanges, and address state-level planning considerations including California clawback under Cal. RTC §18032 and Pennsylvania non-conformity.

Final Assessment – Section 1031 Exchanges: Form 8824 and Installment Sales
You have completed a comprehensive review of Section 1031 like-kind exchanges and §453 installment sales, covering Form 8824 reporting, boot recognition, the 45-day and 180-day exchange deadlines, gross profit ratio calculations, depreciation recapture, and integrated deferral planning strategies. You are now prepared to demonstrate your understanding of the key concepts. The following final examination assesses your knowledge of the material covered in all four modules. A passing score of 70% is required to successfully complete the course.

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