tax-free exchange

tax-free exchange. A transfer of property for which the tax law specifically defers (or possibly exempts) income-tax consequences. • For example, a transfer of property to a controlled corporation under IRC (26 USCA) § 351(a) and a like-kind exchange under IRC (26 USCA) § 1031(a). [Cases: Internal Revenue 3184; Taxation 996. C.J.S. Internal Revenue §§ […]