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Hello, I would like to assist you as I have experience with involuntary conversions.
When did the event take place? What is the nature of the conversion? What is the expected gain? And, do you think they will have the replacement asset in 2 years?
Is this a personal house? 1033 is designed for business/investment assets. On a personal home, you are exempt on the first $250,000 gain as an individual or $500,000 married.
In that case, you should have the conversion and the payment in the same year. A critical factor will be identifying the new property timely. If a taxpayer designates qualified replacement property on a return within the required period and purchases the property at the anticipated price within two years of the end of the gain year (three years—if section 1033(g) applies), a valid election is complete.
If the purchase price is lower than anticipated, resulting in additional gain, taxpayers should report this income by amending the gain(election)-year return. Taxpayers aren’t required to designate replacement property on the election-year return as long as they do so on the replacement-year return and acquire the property within the statutory time constraints. If the taxpayer does not purchase qualifying replacement property within the required two- or three-year window, it must amend the gain-year return to report the gain.
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