Step Up Basis after Like Kind Exchange

[Randall]

Client has a like kind exchange with gain deferral.  Reduced basis of received property.  If client dies, do beneficiaries get that reduced basis stepped all the way up to FMV at death?  Or only from the purchase price (in the exchange) to the new FMV at date of death?  In other words, does the deferred gain go away?

 

 

[FDNY]

The deferred gain goes away.  1031 exchanges are also used as an estate planning tool for that very reason. 

Also, if client dies during the 180 day exchange period the heirs can complete the exchange.

[Randall]

Thanks.  Just wanted a look ahead.  This may happen within the next few years.