Oregon HB 2696 Regarding Taxing 1031 Exchanges Being Withdrawn Today

In a down economy the money has to come from somewhere.  One idea was taxing the 1031 Exchange which has traditionally been a nontaxable event on both state and federal taxes.  The bill would have made the Exchange a taxable event in Oregon.  The summary at the header of the bill reads:

Requires addition to taxable income for Oregon tax purposes of amounts attributable to like-kind exchanges and excluded from federal taxable income because of operation of certain federal law. Applies to tax years beginning on or after January 1, 2010.

1031 is a part of the federal tax code.  Wouldn’t creating a state specific tax on it be akin to taxing a 401k (which also takes its name from federal tax code)?

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