Final answer:
The exchange of an office building in Niagara Falls, NY for one in Niagara Falls, Ontario does not qualify as like-kind because both properties must be located within the U.S. for a like-kind exchange under Section 1031 of the U.S. tax law.
Step-by-step explanation:
Under the United States tax law, specifically Internal Revenue Code Section 1031, a like-kind exchange allows for the deferral of capital gains taxes on the exchange of certain types of property, primarily real estate. However, one of the key stipulations for property to qualify as like-kind under this provision is that both properties must be located within the United States.
Since the properties in this scenario are located in different countries, the exchange would not qualify as a like-kind exchange. The reason for this restriction is that U.S. tax law can only govern and provide benefits for property that falls under its jurisdiction. Property located outside of the United States does not fall under the same tax rules and thus cannot be part of a Section 1031 exchange.