Many smart investors still underestimate the power of tax-deferred, compounding. The math is simple -- invest a dollar today, double it annually, and it will be worth over one million dollars in 20 years. That is, of course, assuming no taxes. Factor in a 35% annual tax rate and the return drops to $22,370. It would take another 7.5 years to reach the million dollar plateau. But what if the dollar were invested in a single investment and held until it doubled the same 27.5 times? In that case, the return would reach about $200 million pre-tax or, after paying a $70 million tax in the final year, about $130 million after-tax. The tax-deferred exchange, as defined in Section 1031 of the Internal Revenue Code, offers investors one of the last great opportunities to take advantage of tax-deffered, compounded returns.