Properly Structuring A Like-Kind Exchange

You have multiple properties that you want to sell and to perform a like-kind exchange.  Do you want to treat these sales as a single exchange or multiple exchanges?  It depends.  According to the Treasury Regulations, you are allowed to identify up to three replacement properties without regard to the fair market value (FMV) of the properties (the "3-property rule").  If you sell four properties and treat them as separate exchanges, then you can identify up to twelve properties.  If the properties are structured as one deferred exchange, then you are limited to identifying three properties.  This limitation gives rise to a greater likelihood to realize gain if properties with relatively higher FMVs could not be identified.  There are various considerations as to how to structure a like-kind exchange as separate exchanges as opposed to a single exchange.