1031 Exchange, sometimes referred as a Tax Free Exchange, Tax Deferred Exchange and Like Kind Exchange. 

   A statement I often here is "I'm selling my Liquor Store, but purchasing another.  I was told,  I won't have to pay tax on the sale, if I use the proceeds to purchase another store (do a Tax Deferred Exchange).  Is that correct?

   Before I answer that question, let me briefly explain the rules for a Tax "Deferred 1031 Exchange.

1. These exchanges are only Like-kind Exchanges for property held for productive use in a trade or business or for investment, if the property received is of a like kind and held for productive use in a Trade or business or for investment.

   Stated an other way, real property or personal property held for productive use in a trade or business or for investment, if the property received is of a like kind held for productive use in a trade or business or for investment.

2. This non-recognition rule does not apply to stock in trade (inventory) or other property held for sale, stocks, bonds, notes, certificates of trusts, benificial interest, partnership interest, securities or evidence of indebtedness or interest.

3.  Also it does not apply to exchanges of property used for personal purpose, such as a 2nd home (Vacation Home), personal auto & etc.

4.  Like Kind Exchanges are for property of the same nature or character.  Rental for Rental, Land for Land, Business Vehicle for Business Vehicle, Equipment for Equipment and etc.

5.  An exchange of goodwill or going concern value of one business for the goodwill or going concern value of another business is not a Like Kind Exchange. (reg.1.1031(a)-2(c))  This is referred to directly in this regulation.

6.  You can also do a Deferred Like Kind Exchange.  This is an issue for an other time and does not change above Nos. 1 - 5.

     The answer to the question above is, very unlikely, since the assets of a Liquor Store, usually consist mostly of Goodwill, paragraph 5, answers that question.  The cost of an accommodator, and an extra escrow would in almost all cases, rule out the feasibility of trying to do any exchange of any personal property that is left.