Determine whether the sale of the land will be considered


Will owns residential rental property that is destroyed by a tornado in March 2012. he files a claim with his insurance company and receives $90000 for the property. The building is fully depreciated and the adjusted basis of the land is $3000. The area around the property is being developed into a high-priced residential subdivision, and Will does not have the cash to build a replacement unit consistent with the quality of the new homes being built. In April 2013, he sells the land for $75000, and in December 2013, he finds a suitable replacement rental property that costs $170000. Before Will acquires the replacement property, he would like you to determine whether the sale of the land will be considered part of the involuntary conversion and eligible for gain deferral.

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Accounting Basics: Determine whether the sale of the land will be considered
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