Which of the following is correct?
A)The deferral of realized gain on a § 1031 like-kind exchange is mandatory.
B)The deferral of realized gain on a direct (into qualified property)§ 1033 involuntary conversion is mandatory.
C)The exclusion of realized gain on a § 121 sale of residence is mandatory (i.e. ,cannot be recognized).
D)Only a.and b.are correct.
E)a. ,b. ,and c.are correct.

Question

Quizplus · Accepted Answer

Option A is correct as the deferral of realized gain on a § 1031 like-kind exchange is mandatory, and the taxpayer must reinvest in like-kind property within the specified time limit to defer the gain.

Option B is also correct as the deferral of realized gain on a direct (into qualified property)§ 1033 involuntary conversion is mandatory, and the taxpayer must use the proceeds to purchase qualified property within the specified time limit to defer the gain.

Option C is incorrect because the exclusion of realized gain on a § 121 sale of residence is not mandatory. It is an option available to taxpayers who meet the requirements of the section, but they can choose to recognize the gain if they wish.

Which of the Following Is Correct