1031 Tax Reform Update – August 2015
The August Recess is here, and with Congress on vacation, things are quieting down in Washington, DC. Although it appears that comprehensive tax reform will be taken up by the next Congress and Administration in 2017, there are still some rumblings about some international tax reform being taken up before year end. Earlier this Spring, there was talk of the possibility of proposals for both international and business tax reform in 2015. Business tax is less likely, but we remain vigilant because anything can happen.
We, along with the FEA and a coalition of other industry associations, have continued to press our message about the importance to the US economy of Section 1031 like-kind exchanges. Regardless of when tax reform actually happens, both the Senate Finance Committee and House Ways & Means Committee are working hard THIS YEAR to formulate the platform for comprehensive tax reform. Waiting until 2017 to speak out will be too late; the positions will already have been taken.
Our efforts thus far have been met with some measurable success. A number of members of the Congressional tax writing committees are openly and vocally supportive of Section 1031. Even those that are non-committal are not sending anti-1031 messages. More and more Congressmen recognize that 1031 provides just a timing benefit to a broad range of taxpayers in a multitude of industries, and that the transactional activity stimulated by the exchange transactions benefits local and national economies. Nevertheless, the risk always remains that section 1031 could be cherry-picked as a “pay for” for an unrelated expense, such as what happened with a recently filed pension bill.
We will keep up the education campaign until there is a clear sign that 1031 is out of the woods, and not in the wood chipper!