If it is taxable, then do the 1031.

Hi @Amy Stanley, since a cash-out refi is not a taxable event, you will not need to do a 1031. 

I also do not have a steady job or taxable income.

I have a problem because I show NO taxable income and they have binders on.

If not, we are planning to hire more help to make it a more "hands-off" business.The appraisal price will only leave me a profit of 2.5 years of my real taxable profit (NOI - mortgage).Part of the reason we are thinking of selling because the local government is running a tax incentive that we don't have to pay capital gain until Jun 2012.

Done properly, the interest is a tax-deductible business expense, so you have the added benefit of minimizing your taxable income while you literally put your money to work in two places at one time.More on this approach is in this thread...https://www.biggerpockets.com/forums/519/topics/245380-paradigm-life-infinite-banking-whole-life-insurance?

Loan proceeds are not taxable. 

It depends on what type of equipment and land improvements it has, so it could vary quite a bit.As for not having to declare that equity as taxable - you may want to investigate that further.

Most business expenses are deductible from taxable income.Remember: As a W2, you make money, the government takes its cut, your employer deducts benefits, etc. and you get what's left, if anything, to pay your expenses.A business makes money, pays its expenses, and pays tax on what's left, if anything.

It looks like even if he was married, there would still be taxable gain since there is no basis.