Involuntary conversion gains may not be deferred if the proceeds of the involuntary conversion are not reinvested.

Question

Quizplus · Accepted Answer

This statement is true. Involuntary conversion gains refer to the capital gains that arise when property is converted involuntarily (i.e. due to theft, destruction, condemnation or eminent domain). Under US tax laws, taxpayers can defer paying taxes on such gains if they reinvest the proceeds in similar property. However, if they do not reinvest the proceeds or reinvest in dissimilar property, they may not be able to defer the gains.

Involuntary Conversion Gains May Not Be Deferred If the Proceeds