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Abstract: 

So-called “1031 leasebacks” result from the like-kind exchange,pursuant to Internal Revenue Code Section 1031, of a fee interest in real property for a leaseback of that property for 30 years or more. As with all Section 1031 exchanges, taxpayers who receive a 1031 leaseback are barred from recognizing gain or loss realized on that exchange. Beginning some 60 years ago, nonrecognition was called into question by a series of judicial decisions. However, the unanimous January 2011 decision of the UnitedStates Supreme Court in Mayo Foundation for Medical Research and Education v. United States seems to have superseded those troublesome precedents. This article argues that 1031 leasebacks are now even better—with Mayo.

Keywords: IRC section 1031; nontaxable exchanges; 1031 exchanges; 1031 leasebacks; Mayo Foundation for Medical Research and Education v. United States; Jordan Marsh v. Commissioner, lease amortization

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