Sec. 6. Limitation of nonrecognition of like-kind exchanges
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Paragraph
(2)of section 1031(a) of the Internal Revenue Code of 1986 is amended— by redesignating subparagraphs (A), (B), (C), (D), (E), and
(F)as clauses (i), (ii), (iii), (iv), (v), and (vi), and by moving such clauses 2 ems to the right, by moving the flush language after the first sentence 2 ems to the right, by striking
(2)and inserting “(2) Exception .—This subsection Exceptions .— This subsection , and by adding at the end the following new subparagraph: Paragraph
(1)shall not apply so much of the gain which, but for such paragraph, would be recognized by the taxpayer with respect to real property exchanged during the taxable year as exceeds $1,000,000. In the case of a pass-through entity, clause
(i)shall be applied at both the entity and at the partner or owner level. For purposes of this subparagraph— Individuals who are spouses or who bear any of the relationships described in section 152(d)(2) to each other shall be treated as 1 taxpayer (without regard to whether spouses file a joint return). All persons treated as a single employer under subsection
(a)or
(b)of section 52 or subsection
(m)or
(o)of section 414 shall be treated as 1 person. In the case of exchanges completed in a taxable year beginning after December 31, 2016, the $1,000,000 amount in clause
(i)shall be increased by an amount equal to— such dollar amount, multiplied by the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2015 for calendar year 1992 in subparagraph
(B)thereof. If any amount as adjusted under the preceding sentence is not a multiple of $1,000, such amount shall be rounded to the nearest multiple of $1,000. . Subparagraph
(A)of section 1031(a)(2) of the Internal Revenue Code of 1986, as amended by subsection (a), is amended— by striking or at the end of clause (v), by striking the period at the end of clause
(vi)and inserting , or , and by inserting after clause
(vi)the following new clause: any collectible (within the meaning of section 408(m), without regard to paragraph
(3)thereof). . Subsection
(f)of section 1031 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: The Secretary shall prescribe such guidance as is necessary for applying subsection (a)(2)(B)(i) in the case of the exchange of multiple pieces of real property by related persons. . Subsection
(b)of section 1031 of the Internal Revenue Code of 1986 is amended— by striking and inserting “ in kind .—If an exchange in kind .— If an exchange , and by adding at the end the following new paragraph: In the case of an exchange to which paragraph
(1)applies— paragraph
(1)shall be applied before the application of subsection (a)(2)(B), and subsection (a)(2)(B) shall be applied— as if such exchange were within the provisions of subsection (a), and by increasing the basis of the property disposed of by the taxpayer in such exchange by the amount of any gain determined under paragraph (1). . Subsection
(d)of section 1031 of such Code is amended by striking in the amount of gain and inserting in the amount of gain (including any gain recognized by reason of subsection (a)(2)(B)(i)) . Subsection
(i)of section 1031 of such Code is amended by striking (a)(2)(B) and inserting (a)(2)(A)(ii) . The amendments made by this section shall apply to exchanges completed in taxable years beginning after December 31, 2015.