Great question.

I just replied to someone in /R/Ripple who gave some pretty bad advice telling others they could do this.

This is some of what i told them:

1031 is not a loophole. You can't just call your trade or exchange a 1031 exchange. Further more you can't use 1031 if you are an active trader of crypto. There is a rule that states you must hold your property for business or investment purposes. However you cannot be a dealer or otherwise treat the asset as inventory or stock in trade.If any individual was a professional trader or in the business (has an LLC etc..) for trading currencies, they CANNOT leverage 1031 in these circumstances.

If you are not a trader and want to leverage a 1031 exchange it requires a facilitator to hold your Crypto "Property" in escrow and exchange it for other crypto property, and then transfer it to you. All this is done with them being the middle man. The cost of this is anywhere from $600-$1500 typically.

Thus if you are NOT a trader/dealer, and you still want to leverage 1031 it makes little financial sense. In this case If your not a trader you most likely have held your asset for longer than 1 year and 1 day. Thus it is subject to LTCG tax of 0%/10%/20%.

At max you would have to pay federal tax of 20% of your gain. Lets say your gain is $8000, tax is thus 20% of that = $1600. Would you pay $1500, to defer $1600 in taxes? ( you will have to pay it eventually unless you keep deferring gains and NEVER take out your money)

BTC= 143jZMVjisqpkY7XSvjmHENHcsD2xXGGwJ XRP =rMSBFdsusApuj8RcgQEUqiMXPHyDw6rhfp