Section 1031 lets you defer capital gains by exchanging "like-kind" property. Since 2018, this is limited to real estate only, but it still touches some route deals.
What changed. Pre-2018: 1031 applied to many business assets including equipment and goodwill. Post-2018: only real property. So a pure route sale (no real estate) is no longer eligible.
Where 1031 still matters.
- The seller's commercial property (a shop, warehouse, or chemical storage facility being sold with the business) can be 1031-exchanged into another commercial property
- A buyer with appreciated real estate elsewhere can 1031 into a property the route operates from
- Sale-leaseback structures can isolate real estate for separate 1031 treatment
Mechanical requirements. Use a Qualified Intermediary (QI). Identify replacement property within 45 days of sale. Close on replacement within 180 days. Reverse exchanges (buying replacement first) exist but are expensive and rare.
Practical guidance. If real estate is a meaningful component of your sale or purchase, plan the 1031 *before* the deal closes. Trying to retrofit a 1031 after the sale closes is impossible, the cash already touched your hands, breaking the rules.
This is a CPA-and-attorney structure. Don't DIY it.