1031 Exchange Wizard is incorrect.

[NikkoSnow]

When using the 1031 Exchange Wizard, it gives you the option to use the simplified method under Regulations 1.168(i)-6T. The specific election is located in 1.168(i)-6(i).

Clicking “What are the tax considerations of this election?” in the Exchange Wizard, Lacerte Help Center States “One advantage of electing out of this regulation is that the new asset does not include basis data such as accumulated depreciation and other basis adjustments. Since these items are omitted, they will not result in ordinary income recapture when the new assets are eventually disposed.”

This is incorrect. The regulation explicitly states the election is for depreciation purposes only and does not affect the application of sections 1245 and 1250 to the relinquished MACRS property. Since Sec. 1245 and Sec 1250 states the rules for depreciation recapture, this means that when the replacement property is eventually sold in a taxable transaction, the accumulated depreciation, including the deferred amount from the original property, will be subject to recapture at that time.

It would be one thing for Lacerte to do the exchange calculation wrong, but the Lacerte Help Center is stating a blatant falsity and classifying that falsity as an "advantage" of the simplified method.