If the Taxpayer Qualifies Under § 1033 (Nonrecognition of Gain

question 257

Multiple Choice

If the taxpayer qualifies under § 1033 (nonrecognition of gain from an involuntary conversion) and the amount reinvested in replacement property exceeds the amount realized, the basis of the replacement property is:

• A) The cost of the replacement property.
• B) The fair market value of the involuntarily converted property minus the postponed gain.
• C) The cost of the replacement property minus the postponed gain.
• D) The amount realized.
• E) None of the above.

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Definitions:

Unregulated Capitalism

An economic system without governmental oversight and regulation, where the market forces are unrestricted and determine the allocation of resources and distribution of goods.

Resettlement Administration

A New Deal agency created in 1935 designed to relocate struggling urban and rural families to communities planned by the federal government.

Sharecroppers

Individuals who farm land owned by another and pay rent either in cash or shares of the crop, often under conditions that perpetuate poverty and dependency.

Tenant Farmers

Farmers who rent land from a landlord to cultivate crops, often living in conditions of economic dependency and limited rights.