Joyce, a farmer, has the following events occur during the tax year.Which of the events qualify as an involuntary conversion under § 1033 (nonrecognition of gain from an involuntary conversion)?
A)Her farm tractor is hauled to the city dump because it is worn out.
B)She burns her barn because it is infested with termites.
C)Her personal residence, adjusted basis of $100,000, is condemned to make way for an interstate highway.She recovers condemnation proceeds of $175,000.
D)She sells 10 acres of pasture land at a loss of $40,000 because she has reduced the size of her dairy herd due to a reduction in milk prices.
E)None of the above.

Question

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The condemnation of the personal residence qualifies as an involuntary conversion because it was not a voluntary sale or exchange, and the proceeds were used to replace or repair the converted property or used to acquire similar property. The other events (A, B, and D) do not qualify as involuntary conversions because they were under Joyce's control or were voluntary decisions.

Joyce, a Farmer, Has the Following Events Occur During the Tax