New York Division of Tax Appeals Blesses At-Closing Drop-and-Swap

Written By Kevin McKernan

On June 12, 2025, the New York Division of Tax Appeals issued an opinion granting section 1031 nonrecognition to at-closing drop-and-swaps (exchanges of undivided interests in real property immediately following distributions from a tax partnership).

The meticulously reasoned opinion affirms that at-closing drop-and-swaps can qualify for section 1031 nonrecognition in the State of New York.

The opinion states and reiterates that section 1031 does not have a general holding-period requirement. 

The opinion should help end cumbersome, superfluous structures (many of which are of questionable validity).

This document is designed for general information only. The information presented in this document should not be construed to be formal legal or tax advice nor the formation of a lawyer/client relationship. 

For more information on this and other topics, please contact Kevin via any of the channels listed below:

📧 kevin@kmckernan.com  | 📞 718-317-5007

Kevin McKernan
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