Dennis,a calendar year taxpayer,owns a warehouse (adjusted basis of $190,000)which is destroyed by a tornado in October 2016.He receives insurance proceeds of $250,000 in January 2017.If before 2020,Dennis replaces the warehouse with another warehouse costing at least $250,000,he can elect to postpone the recognition of any realized gain.

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This is a correct statement regarding the rules for involuntary conversions under section 1033 of the Internal Revenue Code. If the taxpayer replaces the destroyed property with similar property within a certain time period and meets other requirements, they may elect to defer recognition of any gain from the destruction until the replacement property is sold.

Dennis,a Calendar Year Taxpayer,owns a Warehouse (Adjusted Basis of $190,000)which