Joyce, a Farmer, Has the Following Events Occur During the Tax

question 204

Multiple Choice

Joyce, a farmer, has the following events occur during the tax year. Which of the events qualify as an involuntary conversion under § 1033 (nonrecognition of gain from an involuntary conversion) ?

• A) Her farm tractor is hauled to the city dump because it is worn out.
• B) She sells 10 acres of pasture land at a loss of $40,000 because she has reduced the size of her dairy herd in preparation for her retirement.
• C) Her personal residence, adjusted basis of $100,000, is condemned to make way for an interstate highway. She recovers condemnation proceeds of $175,000.
• D) She sells 10 acres of pasture land at a loss of $40,000 because she has reduced the size of her dairy herd due to a reduction in milk prices.
• E) None of the above.

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Definitions:

Only Sell

The strategy focusing exclusively on making sales transactions, often disregarding customer relationship and long-term engagement.

Rewards

Benefits, incentives, or compensation provided to employees, customers, or partners as a recognition of their efforts, loyalty, or achievements.

Salespeople Earn

The income or commissions that sales professionals receive as compensation for their sales activities.

Industrial Products

Goods and services sold from one business to another for the production of further goods and services, not directly consumed by end-users.