Which of the Following Statements Regarding Involuntary Conversions Is Incorrect

question 183

Multiple Choice

Which of the following statements regarding involuntary conversions is incorrect?

• A) The taxpayer- use test applies to the involuntary conversion of rental property owned by an investor.
• B) With some exceptions, the replacement property must be similar or related in service or use to the property converted.
• C) The functional- use test is more restrictive than the like- kind test.
• D) Real property used in a trade or business that is condemned must be replaced with property which has the same functional use as the converted property.

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Definitions:

Liability

A legal obligation or responsibility for any debts or damages resulting from one's actions or decisions.

Doctrine Of Direct Liability

A legal principle that allows an individual or entity to be held directly responsible for harm caused by their actions or omissions.

Scope Of Employment

Activities undertaken by an employee that fall within the duties and responsibilities of their job.

Taxicab

A motor vehicle licensed to transport passengers in return for payment of a fare, usually calculated by a meter.