A warehouse owned and used by Company Z was involuntarily converted by casualty.Which of the following will qualify as a replacement property, subject to nonrecognition of gain?

Question

Quizplus · Accepted Answer

According to IRS rules, to qualify as a replacement property for a casualty conversion, the property must be similar or related in service or use to the converted property. Another warehouse purchased would be similar in use to the converted property, and as long as the amount reinvested equals or exceeds the amount realized from the converted property, it will qualify for nonrecognition of gain. The other options, a vacant parcel of land, rental real property, or another warehouse already owned by Company Z, would not qualify under the same rules.

A Warehouse Owned and Used by Company Z Was Involuntarily