With an Involuntary Conversion, What Is the Time Limit to Purchase

question 59

Multiple Choice

With an involuntary conversion, what is the time limit to purchase replacement property?

• A) Two years from the conversion event.
• B) It ends two years after the close of the taxable year the gain is realized.
• C) There is no time limit.
• D)Five years from the conversion event.

---

Definitions:

Cost of Goods Sold

Expenses directly linked to the creation of goods sold by a business, such as materials and labor.

Inventory Units

The individual items or quantifiable segments of products that a business holds in its inventory, each possibly having a different value or cost basis.

Perpetual LIFO

Perpetual Last-In-First-Out is an inventory cost method assuming that the last items added to inventory are the first sold, continually updating inventory and cost of goods sold values.

Ending Inventory

The overall price of items available for selling at the end of a fiscal period.