If I sell crypto, can I purchase new crypto and avoid paying capital gains tax on it?
Under the Tax Cuts and Jobs Act, Section 1031 now applies only to exchanges of real property and not to exchanges of personal or intangible property. An exchange of real property held primarily for sale still does not qualify as a like-kind exchange. A transition rule in the new law provides that Section 1031 applies to a qualifying exchange of personal or intangible property if the taxpayer disposed of the exchanged property on or before December 31, 2017, or received replacement property on or before that date.
2017-Pub. L. 115–97, §13303(b)(5), substituted "real property" for "property" in section catchline. Subsec. (a)(1). Pub. L. 115–97, §13303(a), substituted "real property" for "property" wherever appearing. Subsec. (a)(2). Pub. L. 115–97, §13303(b)(1)(A), amended par. (2) generally. Prior to amendment, text read as follows: "This subsection shall not apply to any exchange of- "(A) stock in trade or other property held primarily for sale, "(B) stocks, bonds, or notes, "(C) other securities or evidences of indebtedness or interest, "(D) interests in a partnership, "(E) certificates of trust or beneficial interests, or "(F) choses in action.
But from what I'm being told by biased and reputable sources in the cryptocurrency exchanges, the IRS blogs are not legally binding and that for crypto to be taxed like property it must be subject to to Section 1031. Take a look at this article on Forbes.com from 2019, "IRS Kills Tax Free Crypto Exchanges? Not Hardly" which says,
Section 1031 provides that neither gain nor loss is recognized on an exchange of like-kind property
This is simply untrue. It's not like-kind property, it's like-kind real property, the article goes forward to talk about how it's not settled whether or not bitcoin is an exchange or not. But why would that question even matter? Does anyone dispute that it's not "real property" which seems to be required to qualify for 1031?
I'm just confused here, why is this even in dispute?