Taxpayer passed away on 5/5/08.  Taxpayer and wife owned a tenant in common interest in a commercial building in Cleveland Ohio, that was in the midst of being sold.  The sale closed 9 days after the death of the taxpayer (5/14/08).  I'm stepping up the basis of the TIC ownership interest up to equal the sales price of the building.  There is almost a $180,000 loss on the sale due to the costs of the sale.

The proceeds from this sale were held with an accomodator and three separate replacement properties were subsequently purchased within six months after the sale and the properties were properly identified within 45 days of the sale.

Oridinarily you can't recognize a loss in a like kind exchange.

My question of the board, is there any way to declare the taxpayers chose not to do a 1031 exchange, even though sales proceeds were held by an independent accomodator?  I sure hate to lose out on a 180,000 dollar loss.

Question 1b:  It was suggested that if the loss can't be taken, that you can still do a basis adjustment for the loss amount.  Do you know whether you can do this?

I posted this same question on a board that is specifically dedicated to 1031 exchange issues.  An attorney who specializes in 1031 exchanges, specifically confirmed what you just wrote.