Tax deferral denied
November 30, 2016
Tax deferral denied despite lack of prearranged plan for related-party transaction. Sec. 1031 allows capital gains to be deferred when a property is swapped for another property of a like kind, as long as various rules are met. The U.S. Tax Court ruled that a series of like-kind exchanges went against Sec. 1031 related-party rules even though the taxpayer hadn’t intended to involve a related party. The exchanges used a qualified intermediary and, ultimately, property was acquired from a related party. (Malulani Group Ltd. and Subsidiary, TC Memo 2016-209).