Core idea
Section 1031 generally allows nonrecognition when qualifying business or investment real property is exchanged for like-kind real property. Deferral is not the same as permanent exclusion.
REG topic guide
Like-kind exchanges for REG CPA candidates.
Like-kind exchange questions usually test whether gain is deferred, recognized because of boot, or disallowed because the property or purpose does not qualify.
Last reviewed June 5, 2026. World of Accountants is independent and not affiliated with the AICPA, NASBA, Becker, NINJA, UWorld, Gleim, or other CPA review providers.
What REG likes to test
Watch for real property, business or investment use, boot received, debt relief, deferred exchange timing facts, qualified intermediary facts, and carryover basis.
Common miss
Candidates often say no gain is recognized without checking boot, or they treat personal-use property as if it qualifies.
How to practice
Ask four questions: does the property qualify, was boot received, what gain is realized, and what basis carries into the replacement property?
REG topic guides
Keep going with related REG topics.
Practice loop
Use the topic, then answer questions while the idea is fresh.
Short practice sets are enough to expose whether the rule is sticking.