If the taxpayer qualifies under § 1033 (nonrecognition of gain from an involuntary conversion) and the amount reinvested in replacement property exceeds the amount realized, the basis of the replacement property is:
A)The cost of the replacement property.
B)The fair market value of the involuntarily converted property minus the postponed gain.
C)The cost of the replacement property minus the postponed gain.
D)The cost of the replacement property plus the excess of the reinvestment over the amount realized from the involuntary conversion.
E)None of the above.

Question

Quizplus · Accepted Answer

The basis of the replacement property is the cost of the replacement property minus the postponed gain, as per § 1033 rules for nonrecognition of gain from an involuntary conversion.

If the Taxpayer Qualifies Under § 1033 (Nonrecognition of Gain