On Wednesday, August 11, the U.S. Senate concluded the first step in the 2022 budget reconciliation process, introducing and passing a budget resolution on a strict party line vote of 50-49 (one Republican senator was absent). During the all-night session, Senator John Kennedy (R-LA) offered an amendment to the resolution, which recommends that no changes be made to the treatment of like-kind exchanges in the U.S. tax code. This amendment passed the Senate via voice vote.

What does this actually mean?

Since this resolution is essentially an outline, and not the budget itself, the amendments adopted are an indication of the Senate’s feelings, but they are not binding. A voice vote can give senators the chance to avoid going on record, thereby enabling leadership to drop the amendment in conference with the House of Representatives. It reflects intent, and, furthermore, the actual language adopted is very vague and only says "may" and not "shall." This is definitely a positive indication, but it is premature to celebrate any kind of a victory.

ADISA will continue its like-kind exchange advocacy work over the coming weeks with several meetings with congressional members. We encourage all ADISA members to continue their outreach to members of Congress in support of Section 1031 and like-kind exchanges.