Softening the Tax Blow of Early 401(k) Withdrawal for REI?

[Account Closed]

This is more of an Accounting question but the REI aspect of it does warrant discussion IMHO. I have a sizeable 401(k) that I would like to take a distribution on so that I can use it as after tax dollars in order to invest in more real estate and enjoy the benefits today instead of waiting until I am in my 60's. The downside to this is obviously the large hit I will take in terms of income taxes (25% to start) and excise penalty (10%). How can I minimize this?

One thought I had was to take a partial distribution now, use it to purchase a rental property and then reduce my tax burden through accelerated depreciation. Then, beginning next year, take a distribution on the remainder and, again, use accelerated depreciation to soften the tax blow. The goal is to significantly reduce my tax burden on high-income years from the 401(k) early withdrawals. How does this work in the real world? Also, how would I be affected with Depreciation re-capture when I go to sell the property? I think I can avoid this with a 1031 exchange, right?