For years, since 1984,1 interests in a partnership have been considered ineligible for like-kind exchange treatment.2 A partnership can, of course, exchange assets with another individual or entity but partnership interests are not like-kind.3 In 1997, the Internal Revenue Service ruled that, in some circumstances, fractional interests in otherwise eligible property may be deemed a partnership with the result that the exchange is not like-kind.4 That development produced an outcry from taxpayers and tax practitioners with IRS agreeing to study whether undivided fractional interests should be considered eligible for like-kind exchange treatment.5



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