Jared, a fiscal year taxpayer with a September 30th year-end, owns an office building (adjusted basis of $715,000) that was destroyed by fire on September 12, 2012. If the insurance settlement was $950,000 (received March 1, 2013), what is the latest date that Jared can replace the office building in order to qualify for § 1033 nonrecognition of gain?
A)September 30, 2013.
B)September 30, 2014.
C)September 30, 2015.
D)December 31, 2015.
E)None of the above.

Question

Quizplus · Accepted Answer

Under § 1033, a taxpayer has two years after the end of the tax year in which the gain is realized to replace the property. Since Jared's fiscal year ends on September 30, 2013, he has until September 30, 2015, to replace the property.

Jared, a Fiscal Year Taxpayer with a September 30th Year-End