What is latest date on which Wanda can replace property

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Reference no: EM132660022

Problem - Wanda, a calendar year taxpayer, owned a building (adjusted basis of $250,000) in which she operated a bakery that was destroyed by fire in December 2019. She receives insurance proceeds of $290,000 for the building the following March. Wanda is considering two options regarding the investment of the insurance proceeds. First, she could purchase a local building (suitable for a bakery) that is for sale for $275,000. Second, she could buy a new home for $290,000 and go back to college and finish her degree.

Required -

a. To minimize her tax liability, which of these alternatives should Wanda choose?

b. What is the latest date on which Wanda can replace the involuntarily converted property to qualify for § 1033?

c. What is the latest date on which Wanda can replace the involuntarily converted property to qualify for § 1033 if the involuntary conversion is a condemnation?

Reference no: EM132660022

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