Bradley T. Borden (Brooklyn; Google Scholar), The Section 1031 Qualified-Use Requirement, 18 Brook. J. Corp. Fin. & Com. L. __ (2024):

This article uses exhaustive research and analysis of all known qualified-use cases and rulings to show that the qualified-use requirement does not include a holding-period requirement. The article shows that there are several types of qualified-use exchanges that fall within two broad categories—(1) exchanges and proximate business transactions and (2) exchanges and proximate general transactions. The case law and rulings that are relevant to one category of exchanges have little to no relevance to the other category of exchanges. The application of relevant authority clearly shows, particularly with respect to exchanges and proximate business transactions, that exchangers do not have to hold property for any period of time between the time of the distribution or contribution and exchange.

The article also provides multiple tables that summarize information from cases and rulings related to the type of exchange under consideration, the period for which the exchanger held the property, and whether the holding period spanned taxable years. Studying the information in those tables shows how holdings periods and tax outcomes do not correlate and how there simply is no support for the idea that holding exchange property until a subsequent tax year helps establish qualified-use.

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