Can I use 100% Bonus Depreciation as alternative to 1031 Exchange

[Greg Ford]

Need some help with tax math here.    Wondering if this is a viable alternate strategy to a 1031 exchange?    Here are the specifics:

I'm getting ready to sell a rental property (Property A) for about $6.5M next month (June 2018).   My basis in it is around $2.8M.    Between recapture of previous depreciation, capital gains, and other taxes, I'm estimating my tax bill to be around $1M.   My primary goal would be to try to find a suitable 1031 replacement within the guidelines, however, I had another thought...

I happen to have gotten extremely lucky and purchased a $9.5M property (Property B) in Oct of 2017, and my cost segregation study was just completed and identified $2.4M of 5 and 15 year property that can qualify as bonus depreciation on last years tax return (which I have not yet filed).    This should cause just about all of that $2.4M loss to roll to 2018 as a passive activity loss carryover.

Here is my question:   Let's pretend I cannot execute the 1031 exchange for whatever reason.   Can I just buy (and close) any new rental property (Property C) in calendar year 2018, use a new cost segregation study to take advantage of bonus depreciation rules, and if this new property is of sufficient cost, use this bonus depreciation plus the carryover to completely wash out the gain of the sale of Property A?   I sure seems like this would work and I don't see any downside.     It seems like I'm just reducing my cost basis in Property A or C to offset the gain from the sale of B.

But the math is tricky in several ways.   First, I need to make sure Property C is large enough to generate enough bonus depreciation to finish washing out the gain.   If I use 20% as the amount of 5 and 15 year property in an apartment building, and I need another $1.5M of depreciation, it would suggest I need to buy something around $7.5M or so.    Correct?

Second, I'm reducing future depreciation on Properties A and C in favor of eliminating taxes today.   That's similar to 1031 concepts (defer tax to future years).    But I'll be increasing future income on properties A and C slightly due to less depreciation.   My thoughts are that even if income went slightly positive (instead of negative), overall it would keep me in lower tax brackets and probably eliminate the Obama tax that would kick in due to the outright sale of B with no 1031.   Do I have that right?

Third, I still have the options in the future to execute a 1031 exchange on property A or C, further deferring gains.

So could this be a viable alternative to a regular 1031 exchange?   Thanks everyone for your thoughts.