1031 stock exchange 2017

Section 1031 has never applied to the exchange of securities. So in a sense you are covered by the old rules. In other words there is no tax deferral.

Section 1031 used to cover other things such as a business automobile. However it was recently changed so that now it only applies to real estate.

I did taxes from 1970-2000 i always deferred taxes on security exchanges when did the rules change?

As far as I can recall, securities and partnership interests were always excluded from tax deferral under section 1031.

Your post can't be answered accurately as it lacks some very basic information and is ambiguous. 1. I have no idea what you mean by an exchange. 2. I have no idea what you mean by "the total amount is taxable." 3. I have no idea what your reference is to "the old rules."

That said, I can give you an answer if I make the following assumption: You are referring to some sort of acquisition or merger where you received both cash and shares in a new company for the shares you surrendered in the acquired company. The cash received is known as "boot". If the boot you received for your shares is larger than your gain on the transaction, then your total gain is reportable for tax purposes. The excess of cash over gain reduces your cost basis in the new shares. Your total gain is defined as the amount of cash received plus the value of the new shares received on the closing date less your cost basis in the old shares.

The rules for these type of transactions are as follows: Stock exchanged for stock in a merger or acquisition is always tax-free. Your cost basis just transfers to the new shares.

Stock plus boot exchanged for stock where there is no gain causes a reduction in your basis equal to the amount of cash received.

Stock plus boot exchanged for stock where the gain is larger than the boot received causes you to report gain equal to the cash received.

And finally, what I assume happened to you, is where the Stock plus boot exchanged for stock had boot larger than the gain which triggered taxability of your total gain plus an adjustment to basis.

Thanks Alan. I hadn't considered that it might be an exchange of stock in the same or a merged company.

Alan's reply was correct "in general". Unfortunately, every one of the situations he described can also result in a transaction that is 100% taxable. It all depends on other factors which are unknown to us such as where are the two companies domiciled. If they are foreign companies, they often cannot avail themselves of certain provisions of the US tax code. You should have received a proxy statement before the merger which described the anticipated tax consequences. You can also search for the Form 8937 filed by the company which explains the tax treatment after the fact. It may take awhile for the 8937 to be posted publicly.

Ira Smilovitz, EA