It has been possible to claim the I.R.C. § 121 exclusion ($250,000 on a separate return, $500,000 on a joint return) in conjunction with the involuntary conversion provision. But authority has been lacking for using an I.R.C. § 121 exclusion along with like-kind exchange treatment. In late January, 2005, the Internal Revenue Service published guidance for doing precisely that – coupling the Section 121 exclusion with like-kind exchange procedures. The guidance is effective January 27, 2005 but taxpayers may apply the rules in taxable years for which the period of limitation has not expired.
Harl, Neil E.
"Section 121 Exclusion and Like-Kind Exchange on Same Property?,"
Agricultural Law Digest: Vol. 16
, Article 1.
Available at: http://lib.dr.iastate.edu/aglawdigest/vol16/iss3/1