When computing current E & P, taxable income is not adjusted for the deferred gain in a § 1031 like-kind exchange.

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When computing current E & P (earnings and profits), taxable income is not adjusted for the deferred gain in a § 1031 like-kind exchange. This is because the deferred gain is not recognized for tax purposes until a later taxable transaction takes place, and therefore does not affect the current taxable income calculation.

When Computing Current E & P, Taxable Income Is Not