The replacement period for an involuntary conversion always ends two years after the close of the first taxable year in which any part of the gain is realized.

Question

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The replacement period for an involuntary conversion generally ends three years after the close of the first taxable year in which any part of the gain is realized, not two years. This period allows taxpayers to defer recognition of gain if they reinvest the proceeds into similar property.

The Replacement Period for an Involuntary Conversion Always Ends Two