If you've done a 1031 real estate like-kind exchange you know that the "like-kind" definition simply means investment real estate for investment real estate. For example, you can exchange a condo for a duplex, or a duplex for an apartment building, or a single family residence for bare land - you get the picture. But when it comes to "personal property" (the IRC term for tangible, non-real estate assets) the restrictions on what determines like-kind property narrow and can sometimes be a pain in the neck. For example, if you sell a light duty truck you can't replace it with a car, or can you?
The General Asset Classes found in Reg. §1.1031(a)-2(b)(2) or the Product Classes found in Sectors 31, 32 and 33 of the North American Industry Classification System (NAICS) are the industries safe harbor reference guide to determining if you have like-kind property when exchanging tangible assets. Here at Accruit we pay close attention to these codes to ensure a safe harbor transaction.
Currently automobiles and light general purpose trucks have different GAC codes, meaning you cannot exchange one for the other. But recently the IRS ruled by way of PLR 200912004 that cars, light general purpose trucks and vehicles that share characteristics of both cars and light general purpose trucks are like-kind for 1031 exchange purposes. This would include vehicles such as minivans, sport utility vehicles, cargo vans, etc. Here we see a ruling that allows personal property that is not in the same asset or property class to be exchanged as like-kind. This is a new tack for the IRS, and potentially one that can be of tremendous benefit to companies in a number of industries.
Keep in mind that a PLR is only an answer to one taxpayer's question and an exclusive ruling for that taxpayer only. The IRS only releases enough information to justify their ruling, so we have to guess at the related facts that helped bring about this favorable PLR in the first place. My guess is that the exchanged properties were of same use.