Tax-Free Swaps: Using Section 1031 Like-Kind Exchanges to Preserve Investment Net Worth (Nuts & Bolts series)

This diagrammed reference details the requirements and potential benefits of Internal Revenue Code section 1031. Because it is accessibile to billion-dollar corporations to individual property owners, section 1031 has been dubbed the “people’s tax shelter.” Originally enacted in 1921, section 1031 is the product of a fundamental principal of tax law: that a person should not pay gain-or-loss tax as long as the person remains invested in a single piece of property or property of a like kind. This guide explains how property owners can compute the tax benefit section 1031 provides, allowing them to make an educated decision as to whether to proceed with a section 1031 exchange.

Bradley T. Borden is an associate professor of law at Washburn University School of Law and is an active member of the American Bar Association Section of Taxation. He currently serves as the vice chair of the Sales, Exchanges, and Basis Committee. Bradley lives in Topeka, Kansas.