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:

Selling Price

The amount of money a buyer pays to acquire a product or service from a seller.

Trade Discount

A reduction in the listed price of a product or service, offered by sellers to buyers in the same trade.

Hardware Stores

Hardware Stores are retail establishments that sell tools, building materials, and supplies used in home improvement, maintenance, and construction projects.

Rotary Saw

A power tool with a circular blade used for cutting various materials, often used in construction and woodworking.