Iowa's Auctioneer Jason Smith

In order to clarify things in the mind of anyone who is uncertain about it, the farm bill that was passed by Congress does not include the language about like-kind status that those of us in the exchange industry were concerned about. The Senate version of the bill sought to redefine the term “like-kind” as it applies to agricultural ground. The crux of the change was to make land that generated any sort of subsidy from the government for its owner non-like-kind to any other real estate investment. The central objection to that provision, in my opinion, is that the government essentially imposed the subsidies on farmers over the years and it is not equitable to now make it so those same farmers could not exchange out of their long-term investments into something more manageable in their later years.

While this is good news indeed, investors and real property owners all across the country should remain vigilant with regard to potential changes in Section 1031. The mere idea that Congress took a shot at changing like-kind status as a means to raise additional funding for their other activities is cause for concern. Considering the possibility of chipping away at the provisions of Section 1031 is frightening.

Ken Tharp

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Copyright © 2008 By Ken Tharp, All Rights Reserved. * The Farm Bill Does Not Alter the Definition of “Like-Kind” in Regards to Section 1031 Exchanges *