Changing owners after a 1031 exchange

[Jessica Pfann]

Hello,

My husband and his sister inherited 42% of an investment property in California in 2008 and the other 52% last year. They are planning to sell it this year and I believe it will be subject to capital gains tax on the 42%. If they were to do a 1031 exchange on the property, after the close of the purchased property could they transfer ownership to just one of them and their spouse? is that possible to do without a tax implication?