The notion of like-kind exchanges was first incorporated into the US Tax Code in 1921 on the principle of encouraging a continuation of investment and on the belief that taxing such reinvestment would be unfair. The concept and rules governing like-kind exchanges have evolved over the past ninety years, but IRC Section 1031 continues to play an important role in promoting continuation of investment and preventing economy stall.
Despite its importance, IRC Section 1031 is a frequent target for tax reformers. Claiming to seek a simpler or more fair tax system, like-kind exchanges continue to be placed on the cutting block by both the legislative and executive branches.
NExT1031 believes the key to retaining IRC Section 1031 in its current state is education. It is important for law makers and the general public to understand the benefit like-kind exchanges afford the U.S. economy and the determent a repeal or limitations would have. Click HERE to read E&Y’s study on Economic Impact of Repealing Like-Kind Exchange Rules.