In the good old days, a taxpayer could exchange his high-basis relinquished property for his wife’s low-basis replacement property. Thereafter, the taxpayer could sell the replacement property (which now has a substituted high basis) with little or no gain. This technique is known as a basis swap. Years ago, Congress changed the law to plug the basis-swap loophole by banning many related-party exchanges. But one can still complete many types of exchanges with related parties!

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