In a 1031 exchange involving mutliple classes of assets I understand that you have to compare the FMV's of the properties surrendered and received in each general asset class and you must go up in value in each class to completely defer any gains.
If I incurred $1 million in closing costs as part of the exchange, would I reduce the FMV of my real property "surrendered" by $1 million to determine if there is any exchange group deficiency (which would obviously be to my advantage)?