Topic 1: Like-Kind Exchange Miscues

Investors often use the like-kind exchange provisions in the tax code to defer recognition of gains when they want to dispose of an asset. These are complicated transactions which has lead to a small industry being created just to meet the requirements of the provisions. Unfortunately, there are two requirements of like-kind exchanges which are often messed up. If messed up, these result in nullifying all or part of the exchange benefit. What are the requirements for like-kind exchange treatment for realty? Personalty? Of those provisions, which do you believe would be the two which are most often messed up, thereby nullifying all or part of the gain deferral?

Topic 2: Recapture-Schmecapture

What's this recapture thing all about, anyway? We tell people that if they sell an asset (either a capital asset or a Sec. 1231 business asset) at a gain, if held more than one year, we will give them a favorable (i.e., low) tax rate on the gain. Then we come back and tell them "Wait, that is only on the part that is not recaptured as ordinary income!" What is going on? Why have the recapture rules at all? Exactly what is being recaptured? What is the "wrong" that the government is attempting to "right", or in other words, what is the "unfair" thing the tax laws are attempting to prevent from taking place by having recapture rules?