1031 exchange occurred in December of 2014. new property purchased within required time in 2015 for a lesser amount. When is the income recognized-in 2014 or 2015?

On your 2015 return; If you had a taxable gain from your 1031 Exchange, this means you probably received unequal value, boot , from the proceeds of the property you sold. These funds are considered taxable and are included as income in your yearly tax filing