Answer:

No. Partnership interests are specifically excluded from " Like Kind" treatment. A partners exchange of an interest in one partnership may not be exchanged and qualify for 1031 treatment for an interest in another partnership, for ownership in fee simple or any other form of ownership.

Similar provisions apply to a taxpayer's beneficial interest in an estate or trust or to a stock interest in a corporation.

However, this exclusion does not prevent a partnership from exchanging property for other property so long as the additional requirements of Section 1031 are met.

A partner in a partnership who desires the benefits of Section 1031 may want to consider dissolving the partnership and transferring the partnership assets to the individual partners as tenants in common. The tenant in common interest of the individual partner will qualify for exchange and the individual partner may exchange such tenant in common interest for other tenant in common interest or for fee simple.

Suppose a partnership of five equal partners owns an office building and exchanges the office building in a qualifying exchange for five office condominiums. Further suppose that at some time after the exchange, preferably at least one year, the partnership dissolves in a non taxable transaction and deeds the partnership assets in the form of five equal valued condominiums one to each partner.

The basis in the fee simple ownership of a condominium to the individual partner will be the same as the basis the partnership had in that individual condominium. In addition, the individual partner now qualify to exchange his or her interest in the condo.

Answer:

Yes. A corporation or a partnership may exchange property held for the productive use in a trade or business or for investment for property solely in kind to be held for the productive use in a trade or business and qualify for 1031 treatment. The requirement is that the party giving up relinquished property is the same tax reporting entity as the party receiving the replacement property. However, a holder of shares of the corporation or a party holding a partnership interest in the partnership may not exchange the corporate shares or the partnership interest and qualify for 1031 treatment. The code explicitly excludes stocks and partnership interests as being like kind.