After December 31, 2017, it is clear that only real estate can be the subject of a tax-free 1031 exchange.
Whichever side of this debate you are on, the massive tax bill that was just passed limits 1031 exchanges to real estate.
Yet even that new tax law is having a curious impact among crypto investors, who want to keep debating.
Some say the fact that Congress changed the law (prospectively) makes it clear that before the change in the law, crypto swaps were OK.
The new law (saying 1031 is only for real estate) goes into effect for deals after December 31, 2017.
However, the law says that, "[A]n exception is provided for any exchange if the property disposed of by the taxpayer in the exchange is disposed of on or before December 31, 2017, or the property received by the taxpayer in the exchange is received on or before such date." Assuming that 1031 applies to a direct Bitcoin for (say) Ethereum swap, this kind of year-end reverse exchange arguably should too.
When it comes right down to it, one reason many investors might fail to meet 1031's requirements may not be that their deal involved crypto, but rather that they just sold their crypto (taxable), and bought something else.
