Warning: Like-Kind Exchange of Loss Property
While taxpayers generally prefer non-recognition for realized gains (so they do not have to recognize the gain currently and pay the resulting federal income tax currently), they usually prefer to recognize realized losses currently in order to obtain the tax benefit of the resulting deduction sooner. That means a like-kind exchange is unfavorable in the case of a realized loss. None of the loss will be recognized regardless of boot received.
Read more about this topic: Internal Revenue Code Section 1031
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