If the taxpayer qualifies under § 1033 (nonrecognition of gain from an involuntary conversion),makes the appropriate election,and the amount reinvested in replacement property is less than the amount realized,realized gain is:
A)Recognized to the extent of the deficiency.
B)Recognized to the extent of realized gain.
C)Recognized to the extent of the amount reinvested.
D)Permanently not subject to taxation.
E)None of the above.

Question

Quizplus · Accepted Answer

Under § 1033, if the amount reinvested in replacement property is less than the amount realized, realized gain is recognized to the extent of the deficiency. Therefore, the correct answer is A.

If the Taxpayer Qualifies Under § 1033 (Nonrecognition of Gain