The state condemned Cassidy's land on November 25,2017.The land has a $400,000 basis.Cassidy received insurance proceeds of $610,000 on January 27,2018.Cassidy has until what date to defer the gain under the involuntary conversion rules?
A)December 31,2021.
B)December 31,2019.
C)November 25,2019.
D)December 31,2020.

Question

Quizplus · Accepted Answer

Under the involuntary conversion rules, a taxpayer has until the end of the second tax year after the year in which any part of the gain is realized to reinvest the proceeds and defer the gain. Since Cassidy realized the gain in 2018, she has until December 31, 2020, plus one more year, making the correct answer December 31, 2021.

The State Condemned Cassidy's Land on November 25,2017