On June 5, 2017, Brown, Inc., a calendar year taxpayer, receives cash of $883,50

Question

On June 5, 2017, Brown, Inc., a calendar year taxpayer, receives cash of $883,500 from the county upon condemnation of its warehouse building (adjusted basis of $618,450 and fair market value of $883,500).

a. Select either "True" or "False" for each of the following regarding what must Brown do to qualify for § 1033 postponement of gain treatment.

b. Complete the statements below regarding what must Brown do to qualify for § 1033 postponement if the adjusted basis was instead $1,060,200.

Because Brown has a realized on the condemnation of business property, . In this case, § 1033 the normal rules for loss recognition. Therefore, Brown has a realized loss of $ and a recognized loss of $.

• Elect § 1033 postponement of gain treatment • Acquire qualifying replacement property costing at least $883,500 • Acquire the qualifying property no later than December 31, 2019 • Acquire qualifying replacement property costing at least $618,450

Explanation / Answer

a.

Elect section 1033 postponement of gain treatment - True

Acquire qualifying replacement property costing at least $883,500 - True

Acquire the qualifying propert no later than December 31, 2019 - True

Acquire qualifying replacement property costing at least $618,450 - False

b. Adjusted basis of property $1060200

Amount realized from conversion $883500

Realized and recognized loss $176700

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