Which of the following is not necessarily true of the replacement property in an involuntary conversion?
A)The replacement property must be purchased within two years of the conversion.
B)If the converted property is real estate used by the taxpayer, the replacement property must serve the same basic function as the converted property.
C)For condemned real property used in a business, broader groups of replacement properties and a longer reinvestment period (an additional year) are allowed.
D)The replacement property may not have been owned by the taxpayer prior to the conversion or the threat of condemnation.

Question

Quizplus · Accepted Answer

The replacement period for involuntary conversions can vary, especially for property used in a trade or business or held for investment. The typical period is within two years after the end of the first tax year in which any part of the gain is realized. However, special rules can extend this period, such as for property compulsorily or involuntarily converted as a result of a Presidentially declared disaster, where the period is extended to four years.

Which of the Following Is Not Necessarily True of the Replacement