What requirements must I meet to defer my tax liability on the involuntary conversion of property under Section 1033?
If it is clear that the manner in which the taxpayer lost the property was in fact a qualified “involuntary conversion”, then there are two real qualifications the taxpayer must meet to be eligible for non-recognition of gain under Section 1033. First, Section 1033 only allows non-recognition of gain where the replacement property is purchased within the applicable time guidelines. In cases of casualty or theft, the property must be replaced within a period of two years after the end of the first taxable year in which any part of the gain is realized, in the case of eminent domain, the property must be replaced within three years after the end of the first taxable year in which any part of the gain is realized. [IRC Section 1033]. Second, Section 1033 requires that the property lost to involuntary conversion be replaced with like-kind property. This is similar to the like-kind provision under Section 1031, but no where near as liberal. In order to be deemed like-kind under Section 1033
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