"Are you saying that the property purchased for $356,000.00 which is more than the $267,000.00 left after expenses of the sale e.g. transfer taxes, etc., is a failed 1031 exchange because the $356K does not exceed the gross down payment of $550K?"

I'm getting lost between what was stated as Funds and what was stated as Price, for the sale of Property A. Sorry. Person A selling property A is carrying the mortgage and did not get paid in full for the sale, so that money did not go through the exchange? Isn't that the same as if they kept the principal out of the sale of property A?