California Must Allow Like-Kind Tax Swap of Damaged Building

The owner of a commercial property damaged by a storm can reap the tax benefits of a like-kind exchange with another parcel, the California Office of Tax Appeals ruled in an opinion released Monday.

Robert Mitchell and his wife Juli don’t have to recognize the gain from the sale of the damaged property located on East Clinton Way in Fresno, Calif., on their 2018 state income tax returns, absolving them of a $120,000 tax bill, the three-member panel ruled.

The panel rejected the Franchise Tax Board’s argument that the swap didn’t qualify as an involuntary conversion of property under ...