Jeff,a calendar year taxpayer,owns a dry cleaning business (adjusted basis of $220,000).The business is destroyed by a hurricane on October 28,2010.Jeff receives insurance proceeds of $250,000 on January 4,2011.What is the latest date Jeff can reinvest the proceeds in qualified property to avoid recognition of any realized gain?

Question

Quizplus · Accepted Answer

For involuntary conversions due to a disaster in a federally declared disaster area, the taxpayer has four years from the end of the tax year in which the gain is realized to reinvest the proceeds. Since Jeff realized the gain in 2011, he has until December 31, 2015, to reinvest. However, the choices provided seem to be incorrect, as the correct latest date should be December 31, 2015.

Jeff,a Calendar Year Taxpayer,owns a Dry Cleaning Business (Adjusted Basis