BY STEVE DINNEN
So this Amish dairyman in eastern Iowa has a herd of cows that are literally in the way of his planned milking barn remodel. When he sells the cows—necessary to get them out of the way for a lengthy period of time—he will incur a capital gains tax.
Hmm, what to do to not write a check to the U.S. Treasury?
He tucks the cows into a 1031 exchange. He sells them on day one, agrees to buy them back within 45 days, and completes the acquisition within 180 days, by which time the barn is nice and pretty again for Elsie et al.
Such were the heady days of the 1031 exchange program. Artwork, machinery, patents, airplanes, X-ray machines and whatever else might fit into a 1031 got crammed in.
Then Congress awoke. There were ideas around to simply abolish this program. But supporters convinced lawmakers that 1031s spur economic development. So 1031s—named after that section of the Internal Revenue Code, and around since 1921—were tweaked during the 2017 tax overhaul. They now apply only to investment real estate.
Which means no more cows. But hats off to an Amish dairyman for being on top of his game.