ADISA Executive Director Responds to New York Times 1031 Article

May 13, 2016

ADISA Executive Director John Harrison responded to an article in the New York Times titled "Donald Trump and the Art of the Tax Loophole," May 13, 2016:

Let us not let political judgments color the facts on Internal Revenue Code Section 1031 Like-kind Exchanges, which Mr. Rattner list as one of several "tax loopholes" used by Donald Trump historically to minimize his tax liability.  Code Section 1031 exchanges are used commonly in connection with real estate, heavy equipment, conservation land, urban buildings, and other investments, and stimulate the economy by increasing transactions involving these assets -- generally upgrades to great community benefit.  Code section 1031 is no loophole, for the taxes are paid over time, but instead is an original provision of the 1921 tax code, and acts to increase economic velocity and avoid stagnating properties.  Economists tell us in numerous studies that GDP would suffer greatly without this tax deferment provision (conservatively estimated to total at least $8 billion annually); exchanges done pursuant to this code provision generate local sales and property taxes, construction activity, and countless jobs.  Furthermore, the suggestion that exchanges lead to perpetual deferral is not accurate; studies show that 88% of properties and other assets involved in 1031 exchanges are disposed of in final, taxable sales.   The past use by Mr. Trump and other investors of code section 1031, along with other legitimate and time-tested tax strategies (such as those relating to conservation easements), strategies that have been diligently studied and supported by both parties should not be used as fodder for the sake of reflexive political attack.

John P. Harrison
ADISA Executive Director/CEO