Gain deferral is fundamental to the nonrecognition transactions. In which of the following is gain deferral mandatory?
I.Involuntary conversion of business real estate.
II.Like-kind exchange of business real estate.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

Gain deferral is fundamental to the nonrecognition transactions. In which of the following is gain deferral mandatory?
I.Involuntary conversion of business real estate.
II.Like-kind exchange of business real estate.
​
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

In a like-kind exchange of business real estate, gain deferral is mandatory under IRC Section 1031. Involuntary conversions may allow for gain deferral, but it is not mandatory.

Gain Deferral Is Fundamental to the Nonrecognition Transactions