I am currentky in my second year in my masters program and I have a question on my HW assignment that may be someone could help me out in. Here it is:

a.                    Section 1031 provides for a mandatory deferral upon certain exchanges.

b.                   Losses may never be triggered as part of a Section 1031 exchange.

c.                    Deferrals and exclusions have different tax treatments.

d.                   When compared to deferrals, exclusions are more permanent in nature.

(B) is False, but tricky.  You must defer any and all income tax consequences if the transaction was property structured as a 1031 exchange transaction and you reinvested by trading equal or up in value and did not pull any cash out.  So, initially (B) would appear True, however, if you trade down in value the difference that you trade down by will be taxable.  It is usually a gain, but it could be a loss if the overall property had a loss.