An involuntary conversion of rental real estate property requires replacement with property that serves the same "taxpayer use." This means that the property need only be replaced with other rental property.

Question

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According to the tax code, the replacement property in an involuntary conversion must be of the same "taxpayer use," which means it needs to be for rental purposes if the original property was also used for rental purposes.

An Involuntary Conversion of Rental Real Estate Property Requires Replacement