Jared,a fiscal year taxpayer with a August 31st year-end,owns an office building (adjusted basis of $800,000) that was destroyed by fire on December 24,2015.If the insurance settlement was $950,000 (received March 1,2016),what is the latest date that Jared can replace the office building in order to qualify for § 1033 nonrecognition of gain?

Question

Quizplus · Accepted Answer

According to § 1033, the taxpayer must replace the property within two years after the end of the taxable year in which the involuntary conversion occurred. In this case, the involuntary conversion occurred in 2015, which is Jared's taxable year, and his year-end is August 31st. Therefore, he has until August 31, 2018, to replace the office building and qualify for nonrecognition of gain.

Jared,a Fiscal Year Taxpayer with a August 31st Year-End,owns an Office