An en banc panel of the Pennsylvania Commonwealth Court issued a critical opinion for attorneys who advise clients regarding real estate sales. The Court affirmed the Board of Finance and Revenue, which held that a partnership should be assessed Personal Income Tax from the net gains from like-kind exchanges of real property, commonly called “1031 exchanges“. The taxpayers here were members of several partnerships that engaged in 1031 exchanges and sought to defer the gains from those sales under 26 U.S.C. 1031. Since the taxpayers used the Federal Income Tax method of accounting, and gains realized from 1031 exchanges are deferred under federal tax laws, the taxpayers sought the same treatment on their Pennsylvania tax returns. The Board of Finance and Revenue as well as the Commonwealth Court held that Pennsylvania does not allow for the same tax deferment as the IRS.