An involuntary conversion results in money received.If the replacement property is purchased within the two-year period,the basis of the new property is its cost less the deferred gain.

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When an involuntary conversion results in money received, the taxpayer can defer the gain by purchasing a replacement property within the two-year period. In this case, the basis of the new property is its cost less the deferred gain. This is known as a like-kind exchange or a 1031 exchange.

An Involuntary Conversion Results in Money Received