On an involuntary conversion in which the taxpayer does not buy replacement property within the replacement period,the gain on the involuntary conversion and any tax due must be reported:

Question

Quizplus · Accepted Answer

The gain on the involuntary conversion and any tax due must be reported in the year the involuntary conversion occurred, regardless of whether replacement property is acquired or not. The replacement period simply provides a timeline for the taxpayer to defer taxes on the gain if replacement property is acquired within that timeframe. If the replacement period expires without replacement property being purchased, the gain and tax must still be reported in the year the conversion occurred.

On an Involuntary Conversion in Which the Taxpayer Does Not