Current Tax Reform proposals emanating from Congress and the Administration make reference to the notion that the “sole” reason for the enactment of IRC Section 1031, administrative convenience, no longer exists, and therefore the repeal of 1031 is warranted. This revisionist history is untrue.

When Congress enacted the like-kind exchange statute in 1921, the legislative history makes clear that there were three main purposes. The two primary purposes: 1) to avoid unfair taxation of ongoing investments in property and 2) to encourage active reinvestment, are even more relevant today in our global economy than they were in 1921. The third purpose, administrative convenience, ceased to be relevant in any discussion of the policy underlying the statute as early as 1924.

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