Player's for Peace

More Tax Increases Planned for California Taxpayers: Proposed Legislation Would Eliminate Tax Deferral For Some Real Estate Exchanges By Bill Angove California’s massive budget shortfall has generated a variety of legislative proposals intended to raise tax revenue to close the gap. One area that has received attention in the State Legislature is the income tax deferral available to California taxpayers who complete tax deferred exchanges under Internal Revenue Code Section 1031. Section 1031 (a federal tax rule) has been around in one form or another since 1921. That section permits a taxpayer to sell appreciated investment property and to defer the resulting capital gains tax if the taxpayer acquires like-kind replacement property with the requirements of Section 1031. California’s income tax laws have generally conformed to the federal law with respect to tax deferred exchanges such that a California taxpayer may defer both federal and state income taxes by completing a properly st