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@TaxGuyBill wrote:

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No, the client received $310k ($550 sold, $240 bought).  Some of that may have been forwarded to the mortgage company to pay off the mortgage, but the client received $310.

The program is correct and that is all taxable.  There was no point in the client doing the 1031 exchange, and wasting money paying the third-party intermediary.

In this case they're still deferring $75K of gain ($240 - $165) so there might have been some point in doing a 1031 (but I'd guess that the tax savings were eaten up by the fees!)

Rick