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involuntary conversion

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involuntary conversion

An IRS term meaning the involuntary loss of property through destruction or condemnation. The event can be a tax loss or a tax gain, depending on any proceeds received as a result of the involuntary conversion.If there is a gain, the taxes can be deferred. See condemnation.


Involuntary Conversion
The receipt of money or other property as reimbursement for the loss or destruction of property through theft, casualty, or condemnation. Any gain realized on an involuntary conversion can, at the taxpayer's election, be considered nonrecognizable for federal income tax purposes if the owner reinvests the proceeds within a prescribed period of time in similar property.


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Personal casualty gains are recognized gains from the involuntary conversion of property arising from a casualty.
Excess basis in the replacement property received in the exchange or involuntary conversion is depreciated under the applicable period, method and convention at the time of replacement.
Involuntary Conversion What if my property was involuntarily converted by a disaster or I was required to sell due to a governmental or eminent domain action?
 
 
 
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