Asked by Taylor Chisholm on Jun 06, 2024
Verified
The state condemned Cassidy's land on November 25,2017.The land has a $400,000 basis.Cassidy received insurance proceeds of $610,000 on January 27,2018.Cassidy has until what date to defer the gain under the involuntary conversion rules?
A) December 31,2021.
B) December 31,2019.
C) November 25,2019.
D) December 31,2020.
Involuntary Conversion
A process where an asset or property is replaced or converted into a similar asset or payment, often due to theft, destruction, or condemnation, without the owner's consent.
- Acquire knowledge on the essence and stipulations of involuntary conversions, covering the periods allocated for replacements and the treatment of monetary gains.
- Familiarize yourself with the designated temporal restrictions for reinvesting in real estate as a condition to delay gains.
Verified Answer
JM
Jonelle MendozaJun 08, 2024
Final Answer :
A
Explanation :
Under the involuntary conversion rules, a taxpayer has until the end of the second tax year after the year in which any part of the gain is realized to reinvest the proceeds and defer the gain. Since Cassidy realized the gain in 2018, she has until December 31, 2020, plus one more year, making the correct answer December 31, 2021.
Learning Objectives
- Acquire knowledge on the essence and stipulations of involuntary conversions, covering the periods allocated for replacements and the treatment of monetary gains.
- Familiarize yourself with the designated temporal restrictions for reinvesting in real estate as a condition to delay gains.
Related questions
The Replacement Period for an Involuntary Conversion Always Ends Two ...
Richard's Business Is Condemned by the State on July 10,2017,as ...
Which of the Following Is Not an Element of Conversion ...
Which of the Following Is Not an Element of Conversion ...
Freud and His Contemporaries Viewed Conversion Symptoms as the Result ...