Solomon C, Lao, CCIM.  Your Partner In Commercial Real Estate.

   

Boot...

Having nothing at all to do with footwear, "Boot" is an English term, which refers to that which is necessary to even out an exchange. Boot is property, which is not "like kind" as to other property acquired in an exchange transaction.

Boot Receipt = Gain Recognition

An Exchanger who receives boot in an exchange transaction generally recognizes gain to the extent of the value of boot received. Some common examples of boot are:

bulletCash proceeds an Exchanger receives from the Qualified Intermediary;
bulletProceeds taken from the exchange in the form of a note* or contract for sale of the property;
bulletRelief from debt on the relinquished property caused by the assumption of a mortgage, trust deed, contract, or an agreement to pay other debt;
bulletPersonal Property received which is not "like-kind." Personal Property is never "like-kind" to real property, and it must match very closely in order to be "like-kind" to other personal property exchanged.

Examples of non "like-kind" property:

Cold bullion in not "like-kind" to silver bullion (Rev. Rul. 82-166, 1982-2 CB 190)

Male livestock is not "like-kind" to female livestock (IRC  1031 (e))

* An Exchanger can utilize IRC  453 to recognize the gain (boot) of a seller carry-back note received in an exchange transaction under the installment sale rules.

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