Involuntary conversion treatment under § 1033 applies to gains and losses.

Question

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Involuntary conversion treatment under § 1033 of the Internal Revenue Code primarily applies to gains, allowing taxpayers to defer recognition of gains if they reinvest the proceeds from the involuntary conversion (such as from destruction, theft, seizure, or condemnation) into similar property. It does not apply to losses, as losses are generally deductible in the year they are realized.

Involuntary Conversion Treatment Under § 1033 Applies to Gains and Losses