Which of the Following Is Not Necessarily True of the Replacement

question 45

Multiple Choice

Which of the following is not necessarily true of the replacement property in an involuntary conversion?

• A)The replacement property must be purchased within two years of the conversion.
• B)If the converted property is real estate used by the taxpayer, the replacement property must serve the same basic function as the converted property.
• C)For condemned real property used in a business, broader groups of replacement properties and a longer reinvestment period (an additional year) are allowed.
• D)The replacement property may not have been owned by the taxpayer prior to the conversion or the threat of condemnation.

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Definitions:

Outlet Stores

Retail stores that sell products directly from manufacturers at discounted prices, often offering overstocked items, seconds, or end-of-season goods.

Discount Retailers

Retail stores that offer products at lower prices than those of competitors, typically by selling items in bulk or with minimal services.

Supercenters

Large retail establishments that combine groceries and general merchandise goods under one roof, catering to a wide range of consumer needs.

Hypermarkets

Large retail spaces that combine a supermarket and a department store, offering a wide range of products under one roof.