When § 1031 Exchanges Fail: Rev. Rul. 80-58 Rescission, Tax Consequences, and Professional Liability Exposure Across the Advisor Stack

James T. Walther, Vice President & General Counsel | Legal 1031 Exchange Services, LLC

James T. Walther is Vice President and General Counsel of Legal 1031 Exchange Services, LLC, where he advises the company’s leadership team and supports its business operations. He works directly with Legal 1031’s clients and their advisors on the structure of complex tax-deferred exchanges.

• Education & Credentials

Mr. Walther holds an LL.M. in Taxation from Temple University’s Beasley School of Law, a J.D. from Rutgers School of Law, and a B.A. in Political Science from Stony Brook University. He is admitted to practice in Pennsylvania, New Jersey, the U.S. District Court for the Eastern District of Pennsylvania, and the U.S. Tax Court.

• Recognition & Leadership

Mr. Walther leads Legal 1031’s parking exchange program, with a focus on reverse exchanges, improvement exchanges, and other complex transactions. He is a certified instructor for Real Estate Continuing Education and Continuing Legal Education in multiple states.

• Professional Involvement

A frequent speaker on IRC §1031 tax-deferred exchanges and real estate taxation, Mr. Walther teaches legal, accounting, real estate, and financial professionals through seminars and continuing education programs. He writes industry articles and technical content on 1031 exchanges, real estate, and business taxation, and has been interviewed in national tax publications.

• Experience

Before joining Legal 1031, Mr. Walther practiced law at a Philadelphia firm, where his work centered on real estate, employment law, and business law. His background also includes roles in real estate and finance, which inform his approach to transactional structuring.

Matthew E. Rappaport, Vice Managing Partner | Falcon Rappaport & Berkman LLP

Matthew E. Rappaport is Vice Managing Partner of Falcon Rappaport & Berkman LLP and chairs the firm’s Taxation and Private Client Groups. His practice concentrates on taxation as it relates to real estate, closely held businesses, private equity funds, family offices, and trusts and estates, advising on tax planning, structuring, and compliance for commercial real estate projects, all stages of the business life cycle, generational wealth transfer, family business succession, and executive compensation.

• Education & Credentials

Mr. Rappaport received both his Master of Laws in Taxation and his Juris Doctor from Georgetown University Law Center. He is admitted in the State of New York, the United States Tax Court, the United States District Courts for the Southern and Eastern Districts of New York, the United States Court of Appeals for the Second Circuit, and the Supreme Court of the United States.

• Recognition & Leadership

Mr. Rappaport was selected to the New York Metro Super Lawyers Rising Stars list from 2017 through 2025 and received the NBI 2025 Outstanding Faculty Award. At the firm, he leads two practice groups as Chair of Taxation and Chair of Private Client.

• Professional Involvement

Mr. Rappaport serves on the Sales, Exchanges & Basis Committee of the American Bar Association Section on Taxation, is a member of the New York State Bar Association, and is a past Vice Chair of the Taxation Committee of the Nassau County Bar Association. His articles have appeared in the Journal of Taxation of Investments, The Tax Adviser, ABA Tax Times, and Bloomberg BNA’s Tax Management Real Estate Journal, and he is a frequent CLE presenter, including prior programs for myLawCLE.

• Experience

Mr. Rappaport is known for complex transactions involving advanced tax considerations, including Section 1031 exchanges, the Qualified Opportunity Zone program, freeze partnerships, private equity mergers and acquisitions, and Qualified Small Business Stock. He has served as a trusted advisor to prominent real estate funds, executives of multinational corporations, venture capitalists, startup businesses, and ultrahigh net worth families, and collaborates with attorneys, accountants, financial advisors, bankers, and insurance professionals on matters requiring tax-focused analysis.

James D. Spithogiannis, Partner | L’Abbate, Balkan, Colavita & Contini, L.L.P

James D. Spithogiannis is a Partner at L’Abbate, Balkan, Colavita & Contini, L.L.P., where he concentrates his practice in professional liability, including the defense of lawyers and accountants.

• Education & Credentials

Mr. Spithogiannis received his Juris Doctorate in 2010 from Brooklyn Law School, where he was a CALI Excellence Award recipient. He earned a Bachelor of Business Administration degree from the University of Michigan – Ann Arbor. He is admitted to practice in the State of New York and before the United States District Courts for the Southern and Eastern Districts of New York.

• Recognition & Leadership

Mr. Spithogiannis has been recognized as a Rising Star in the New York Metro Edition of New York Super Lawyers annually since 2019.

• Professional Involvement

Mr. Spithogiannis practices within the firm’s Accounting and Business Professionals and Attorney Liability groups. He co-presented at the New York State Bar Association CLE program “Starting A Solo Practice In New York 2023.”

• Experience

Before joining the firm, Mr. Spithogiannis concentrated his practice in commercial and real estate litigation, experience that now informs his defense of professionals in matters arising from failed transactions.

SESSION 1 – When §1031 Exchanges Fail: Fixing Blown Deadlines and Boot | 1:00pm – 2:00pm

This session examines the tax consequences of failed and partially failed §1031 like-kind exchanges, including absolute 45-day and 180-day deadline failures under IRC §1031(a)(3), boot calculation mechanics for cash boot, mortgage boot, and proration boot under §1031(b), and last-resort remedies including the rescission doctrine under Rev. Rul. 80-58 and installment-sale treatment under IRC §453 for year-end straddle situations. Attorneys will gain a working command of the three identification safe harbors, the asymmetric netting rule under Treas. Reg. §1.1031(k)-1(j)(3), and the decision framework for abandoning, unwinding, or deferring gain when an exchange collapses mid-transaction. Competencies gained include the ability to audit a failing exchange in real time, compute recognized gain in partial exchange scenarios, and advise clients on Form 8824 reporting obligations for successful, partial, and failed exchanges.

BREAK | 2:00pm – 2:10pm

SESSION 2 – Malpractice Exposure When §1031 Exchanges Fail | 2:10pm – 3:10pm

This session examines the full spectrum of legal malpractice, breach of contract, and fiduciary duty claims that arise when a §1031 exchange collapses, covering liability exposure for transactional counsel, tax advisors, CPAs, and qualified intermediaries. Attorneys will learn how courts apply the case-within-a-case causation standard, how tax deficiency and IRS interest are measured as recoverable damages under majority and minority rules, and how engagement letter scope limitations, comparative fault defenses, and joint-and-several liability interact when multiple professionals are implicated. Attendees will leave with a practical framework for assessing their own exposure, structuring defensible engagement letters, conducting QI due diligence, and satisfying ABA Model Rule 1.1 Competence and Rule 1.4 Communication duties at each critical exchange decision point.