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Section 1031 of the Internal Revenue Code allows for the deferral of taxes on the sale of property if another property is purchased with the proceeds. This property must be of the same nature, character, or class as the original property. Additionally, both properties must be held for business or investment, not personal use. These exchanges allow for tax deferment, not a tax deduction or exemption.
Still at issue on the Congressional front, former Senator Max Baucus (D-MT), then Chair of the Senate Finance Committee, and Representative Dave Camp, the current Chairman of the House Committee on Ways and Means, released initial proposals for corporate tax reform in November 2013 and again in February 2014, respectively. As part of their drafts, both recommend the outright elimination of Section 1031 exchanges. Baucus originally stated he wanted to pass tax reform legislation before the end of the 113th Congress in December. However, he is now serving as Ambassador to China. Following Baucus’s departure, Senator Ron Wyden (D-OR) became the Committee Chairman and Wyden has yet to outline his priorities for moving tax reform.
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