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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References in periodicals archive

Receiving payment for a principal residence destroyed by a casualty or condemned by a governmental body is an involuntary conversion. Tax professionals should understand the tax consequences of an involuntary conversion of a taxpayer's principal residence to be able to advise their clients properly.

Involuntary conversion of a principal residence

For example, if there is a recovery for fully depreciated business property, the result is a gain from an involuntary conversion.

Tax and Financial Aspects of Casualty and Disaster Losses under the Tax Cuts and Jobs Act

The Isabella and Ferdinand stories include their establishment of the Inquisition, subjugation and Christianization of the Canary Islands, completion of the Reconquista, and expulsion of the Jews from Spain, illustrating European doctrines of conquest, enslavement, and involuntary conversion and how the sovereigns ruled over Old World peoples before encountering Native Americans.

Encounters Unforeseen: 1492 Retold

If the taxpayer disposes of the asset by sale, exchange, or involuntary conversion, the taxpayer must recognize gain or loss.

Implementing the new tangible property regulations: the revised "repair regs." require thorough assessment

With the damage to its building and equipment amounting to a total loss, UL has experienced an involuntary conversion. It must recognize a gain or loss in the period of the involuntary conversion of its nonmonetary assets to monetary assets, regardless of whether it reinvests settlement monies.

Complexities in booking insurance claims: natural disasters can leave millions of dollars in damages in their wake. Cleaning up the physical mess is one thing. Preparing the insurance claim and accurately accounting for the damage can be a whole other matter

Its "involuntary conversion" provision extends the period residential and commercial property owners may reinvest Katrina-related insurance proceeds without having to pay capital gains tax from two to five years.

Hurricane damage spurs whirl of activity in Congress

Involuntary conversions. An involuntary conversion occurs when property is converted to money or other property because of its complete or partial destruction, theft, seizure or condemnation, or if it is disposed of under threat of condemnation.

H.R. 3768: the Katrina Emergency Tax Relief Act of 2005

"This proposal would clarify involuntary conversion treatment when the recipient of quota buyout payments elects to reinvest such amounts directly in domestic, value-added agricultural enterprises or other agricultural cooperative associations," says Sine.

Co-op wants incentives for buyout payments to fund value-added ag

Fortunately, some or all of the tax on casualty gains may be deferred, provided the taxpayer qualifies under the involuntary conversion rules.

Help clients avoid casualty gain trap after disasters: the rules can be complex and often require a pre-emptive planning approach

96-32, the IRS allows the proceeds of the sale of the lot to be considered part of the involuntary conversion and deferrable under Sec.

Lessons learned: CPAs share tips on disaster recovery