Thank you for your quick response.

First, this issue is more complicated because the 1031 exchange involves one property being relinquished for two replacement properties. The two new properties are $600,000 more in value, so I have both an exchange basis and an excess basis.

I understand that the excess basis has a new separate 27.5-year depreciation schedule.

Can I check "Yes" to elect out of the 1.168 rule which would allow me to treat the excess and exchange basis as the same 27.5.

Doesn't Notice 2000-4 allow this? 

I very much appreciate your patience. 

Thanks, Christopher