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 24,2016.If the insurance settlement was $950,000 (received March 1,2017),what is the latest date that Jared can replace the office building in order to qualify for § 1033 nonrecognition of gain?
A)December 31,2016.
B)August 31,2017.
C)December 31,2018.
D)August 31,2019.
E)None of the above.

Question

Quizplus · Accepted Answer

Jared has until the due date (including extensions) of his tax return for the tax year in which the insurance proceeds were received to replace the destroyed property in order to qualify for nonrecognition of gain under § 1033. Since the insurance proceeds were received on March 1, 2017, the latest date Jared can replace the office building would be August 31, 2019 (the due date of Jared's 2017 tax return including extensions). Therefore, the correct answer is D.

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