13. Losses are not recognized in like-kind exchanges but are recognized in involuntary conversions.
14. Amounts received as severance damages reduce the basis of the retained property and any amount received in excess of the property's basis is treated as gain.
15. The functional use test is the most liberal test to determine replacement property in an involuntary conversion.
Loss is ever recognised in like-kind exchanges.
In involuntary conversions recognized casuality ,theft;condensation.
Severance damages are amounts received because of the decline in value. Amounts received as severance damages reduce the basis of the retained property and any amount received in excess of basis is treated as gain.
if the taxpayer owned and used the property that was converted, the replacement property must be used in the same way as the converted property.
Get Answers For Free
Most questions answered within 1 hours.