The like-kind tax free exchange treatment is an example of the wherewithal to pay concept.

Question

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The like-kind exchange, under Section 1031 of the Internal Revenue Code, allows taxpayers to defer recognition of capital gains and related federal income tax liability on the exchange of certain types of property, reflecting the wherewithal to pay concept by not taxing transactions where the taxpayer's economic position has not fundamentally changed.

The Like-Kind Tax Free Exchange Treatment Is an Example of the Wherewithal