Like-kind exchanges and regular disposals and additions

If a like-kind exchange results in a gain of less than 25 percent, then coordinate the old asset disposal and new asset addition in these ways:

After you dispose the old asset, you must move the incurred loss to the Deferred Loss account.
After you add the new asset, you must use the Deferred Loss account as the Asset Clearing account, the asset basis that you specify, and the newly calculated asset basis that is described in like-kind exchange transaction calculation.
After you are prompted to accept the journal entries that are created, you must adjust the journal entries to delete the Deferred Loss account and add the recognized gain to the Gain account.