FORM 8824 PREPARATION SUPPORT

Form 8824 is where the whole exchange either holds up or doesn't, at least on paper as far as the IRS is concerned, and it's built entirely from numbers that should already exist somewhere in the closing file if the underlying paperwork was assembled correctly from the start, realized gain, recognized gain, adjusted basis in the replacement property, and any cash or mortgage boot received along the way through the closing. The work here isn't filling out the form itself, that's the CPA's job, it's making sure the underlying figures reaching them are correct and traceable to actual closing statements rather than estimated after the fact. A CPA working from a clean, sourced set of numbers can prepare the form once and move on, while one working from rough estimates often ends up circling back with questions that could have been answered before the return was ever started.

Realized gain is the relinquished property's sale price minus its adjusted basis and selling costs, and it's usually the easiest number to pull cleanly from a Las Vegas closing statement. Recognized gain, the taxable portion, only shows up if there's boot involved, cash not reinvested, debt relief not offset, or non-like-kind property received. Basis in the replacement property carries over from the relinquished property's basis, adjusted for any additional cash invested or boot recognized, and it's the number most likely to be wrong if the exchange involved more than one closing. Recognized gain is separate from mortgage boot on the closing statement itself, so pulling the wrong line item off a settlement statement is a common source of an incorrect figure reaching the CPA, and it's an easy mistake to catch with a second review before the figures are sent along.

A consolidation exchange closing on three or four replacement properties across different submarkets, one in North Las Vegas, one near Henderson, one further along the I-15 corridor, splits the carried-over basis across each property in proportion to relative fair market value, and that allocation has to be documented, not estimated. We build the allocation schedule as each closing happens rather than reconstructing it from memory once the exchange is done, since a wrong split shows up later as an incorrect depreciation schedule on every one of those properties. That kind of error tends to compound quietly over several years of returns before anyone notices, which is exactly why the allocation gets documented at the time of closing rather than reverse-engineered afterward.

Nevada has no state income tax, so a Las Vegas exchange only carries federal exposure on Form 8824 and the related Schedule D or 4797 entries, which removes one layer of complexity investors coming from other states are used to dealing with. It doesn't reduce the depreciation recapture exposure or change how boot gets taxed federally, and investors relocating exchange proceeds into or out of Nevada should still confirm how their prior state of residence treats the transaction if that's relevant to their filing. An investor moving from a state with its own capital gains treatment into a Las Vegas replacement property, for example, may still owe that state something on the year the relinquished property sold, separate from anything Nevada requires.

• Adjusted basis and selling costs on the relinquished property
• Cash boot received or mortgage boot from reduced debt
• Closing statement figures for every replacement property
• Basis allocation across multiple replacement closings
• Depreciation recapture exposure carried into the replacement basis

The package that goes to the CPA includes the exchange agreement, every closing statement, the identification notice, and a summary schedule tying realized gain, recognized gain, and basis together so the figures don't need to be reconstructed from scratch. Investors should confirm final treatment of any disputed boot or basis allocation with their tax advisor before the return is filed, since Form 8824 is where the IRS will look first if the exchange is ever questioned.