How to Fill Out Form 8824

Co-authored by Alan Mehdiani, CPA

Last Updated: July 31, 2023

You become familiar with IRS Form 8824 if you are involved in bartering or exchanging one product for another. Admittedly, if your friend gives you a copy of a book and you give him or her a movie in return, no one will care. However, as the value rises increasingly, even the IRS wants to know what your transaction entailed. You must show you did not wrongfully profit from a transaction. You need to fill out Form 8824 to protect yourself.

Method 1

Method 1 of 1:

Filling Out Form 8824

1
Find IRS Form 8824 on the IRS website (http://www.irs.gov).
- Make sure you use the current tax year's form.
- Understand you need to fill out one Form 8824 for each exchange you make.
2
Begin to fill out the form while you're still on the IRS website. The instructions provided walk you through the process, step by step.
- Start with the type of item you gave up as requested in Part I, Line 1.
- Proceed to Line 2 in answering the remainder of the questions beginning with the article you received in return.
- Lines 3 through 6 explain the history of the exchange. Fill out each one with the appropriate date-related information.
- The next few questions are in Part II and pertain to any related party who might have been involved in the transaction.
- Part III considers the actual financial value of the transaction. Lines 12 through 14 need only be completed if your transaction was not actually a "like-kind" exchange. Otherwise, go to Line 15. You most likely will not have any taxes to pay and provide this information for knowledge purposes.
- Part IV deals with any possible "conflict of interest" issues you may incur. It will only pertain to instances where a higher replacement value takes place after noting the original item's value. This is particularly important for people in any job of power (government or otherwise) to consider.
Do not embellish it in any way.
Further tax form needs could easily include minimized gains on exchanged property. For this, you should ask the accountant about Form 1031.

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Question

What is form 8824 used for?

Alan Mehdiani, CPA
Certified Public Accountant
Alan Mehdiani is a certified public accountant and the CEO of Mehdiani Financial Management, based in the Los Angeles, California metro area. With over 15 years of experience in financial and wealth management, Alan has experience in accounting and taxation, business formation, financial planning and investments, and real estate and business sales. Alan holds a BA in Business Economics and Accounting from the University of California, Los Angeles.

Alan Mehdiani, CPA

Certified Public Accountant

Expert Answer

This form is used for like-kind exchanges, which are usually referred to as a 1031. Let's say that someone owns a rental property and is looking to sell their current property and buy another one. They would utilize what's called a 1031 exchange or a like-kind exchange, because it has tax benefits. If you sell a rental property, follow the required guidelines, and immediately buy another rental property, you don't have to pay tax on the gain or on the sale of the initial property.

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Tips

All rules governing the exchange of property transactions are covered in the publication, "Instructions for Form 8824."

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Only like-kind exchange gains are eligible for this form, and losses are not recognized.

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Warnings

You need Form 8824 to back up your tax history in case your transaction is ever considered to be a conflict of interest.

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