Deferred gain refers to the amount of gain that is realized but not recognized at the time of a transaction, commonly occurring in tax-deferred exchanges, often known as 1031 exchanges. Essentially, deferred gain allows taxpayers to defer paying taxes on capital gains by reinvesting the proceeds in like-kind properties.
Recognized gain is the portion of a realized gain that is subject to taxation in a so-called tax-free exchange, such as under the IRS Section 1031 rule.
