Which item is NOT part of a tax-deferred exchange?

In the context of a tax-deferred exchange, particularly under Section 1031 of the Internal Revenue Code, the term "highest and best use" is not a relevant factor. Tax-deferred exchanges allow real estate investors to defer capital gains taxes when they sell a property and reinvest the proceeds into a similar property, often referred to as "like-kind" property.

The concept of "like kind" is crucial as it defines the properties eligible for exchange; they must be of similar nature or character. "Boot" refers to any cash or non-like-kind property that may be included in the exchange, which could trigger taxable gain. Likewise, "mortgage relief" can affect the exchange mechanics by adjusting the debt structure but still relates to the tax implications of the exchange.

In contrast, "highest and best use" pertains to the optimal use of a property to maximize its value but does not influence the eligibility or structure of a tax-deferred exchange. Thus, it is correctly identified as the item that does not belong in this specific context.