To Repeal or Retain Section 1031: A Tempest in a $6 Billion Teapot
Taxation News Quarterly, A.B.A. Sec, Vol. 34, No. 1, 2015
10 Pages Posted: 13 May 2015
Date Written: May 7, 2015
This article is a condensation and summary of the “Lincoln-Douglas Debate on Whether to Repeal Code 1031” held at the Teaching Tax Committee meeting at the 2105 ABA Section of Taxation Midyear Meeting in Houston, Texas. The article provides a brief history of section 1031. It then presents arguments for repealing section 1031, such as the inequitable distribution of section 1031 benefits, the asset-type lock-in effect of section 1031, and the administrative burden caused by section 1031. It also presents arguments for retaining section 1031, including equity justification for section 1031 under the continuity-of-investment theory, the asset-specific lock-in effect that section 1031 helps ameliorate, and the potential tax-revenue gains presented by section 1031. It concludes with a discussion of possible reform alternatives, such as a move to a rollover provision and a modification to the definition of like-kind property.
Keywords: Section 1031, like-kind exchange, like-kind property, lock-in effect
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