Accepted Answer

To postpone reporting your gain from a condemnation, you must buy replacement property within a certain period of time. This is the replacement period. The replacement period for a condemnation begins on the earlier of the following dates.

• The date on which you disposed of the condemned property.

• The date on which the threat of condemnation began.

The replacement period generally ends 2 years after the end of the first tax year in which any part of the gain on the condemnation is realized.
If real property held for use in a trade or business or for investment (not including property held primarily for sale) is condemned, the replacement period ends 3 years after the end of the first tax year in which any part of the gain on the condemnation is realized.

Let me know if you have any question.

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

Expert:	RD
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Answered:	10/28/2009

Certified Public Accountant (CPA)

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