The history of like-kind exchanges under the U.S. Tax Code is nearly as old as the income tax. The adoption of the 16th Amendment in 1913 allowed a tax on income of individuals and corporations; 1921 saw the adoption of the first provision for tax deferred exchanges. In T.J. Starker v. Commissioner, 602 F.2d 1341 (1979), the Ninth Circuit Court allowed a taxpayer to sell property to paper giant Crown Zellerbach, which agreed to transfer the replacement property of equal value (plus interest) requested by the taxpayer during the next five years. Starker caused a flurry of like-kind exchanges on the West Coast, and an industry arose to accommodate delayed exchanges, largely with banks, title insurance companies, and escrow companies.

By 1984 Congress had limited delayed exchanges to those in which the taxpayer has identified replacement property within 45 days and acquired the replacement property in 180 days, and in 1989 adopted 1031(f) limiting related party exchanges. The Internal Revenue Service adopted final regulations in 1991 implementing the 45-day and 180-day limitations and established safe harbors that formalize many existing practices and simplify the process of closing exchange transactions. This began the nationwide growth of the like-kind exchange business.

In 2000, the Service adopted Revenue Procedure 2000-37 allowing taxpayers a method to effect "reverse exchanges" or parking arrangements for a maximum period of 180 days. Two years later, the Service published Revenue Procedure 2002-22, establishing ruling guidelines for tenant-in-common sponsors and allowing up to 35 investors to combine their capital as owners of undivided interests that would not be considered "partnership interest" for 1031 (a)(2)(D). This began the explosive growth of the replacement property industry.

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