72-16-348. Exchanges of qualified real property. (1) If an interest in qualified real property is exchanged solely for an interest in qualified exchange property in a transaction that qualifies under section 1031 of the Internal Revenue Code, no tax may be imposed by 72-16-338 by reason of the exchange.
     (2) If an interest in qualified real property is exchanged for an interest in qualified exchange property and other property in a transaction that qualifies under section 1031 of the Internal Revenue Code, the amount of the tax imposed by 72-16-338 by reason of the exchange must be the amount of tax that would have been imposed on the exchange under 72-16-338, without regard to this section, reduced by an amount which bears the same ratio to such tax as the fair market value of the other property bears to the fair market value of the qualified real property exchanged. Fair market value must be determined as of the time of the exchange.
     (3) For purposes of 72-16-338:
     (a) any interest in qualified exchange property must be treated in the same manner as if it were a portion of the interest in qualified real property that was exchanged;
     (b) any tax imposed by 72-16-338 by reason of the exchange must be treated as a tax imposed on a partial disposition; and
     (c) 72-16-338 must be applied by treating material participation with respect to the exchanged property as material participation with respect to the qualified exchange property.

     History: En. Sec. 22, Ch. 511, L. 1983.