Can Total Return Swaps be settled in-kind (with delivery of securities) instead of cash settled and what are the tax implications if so?

If 2 parties enter into a swap agreement to exchange the cash flow of 2 different assets, can the agreement be set up so that payment is made in shares of the asset instead of cash?

If so, how is this taxed?

I know that with cash-settled swaps you pay tax on the cash flows as ordinary income, but with in-kind settlement would you have to pay taxes immediately or be able to defer tax until you sell the securities?