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    #1

    Involuntary Conversion

    Taxpayer owns land on which some useless buildings reside. Department of Transportation (DOT) wants to condemn the land and pay him for the land only. DOT will pay to raze the buildings. TP intends to replace the land within the required time period in order to defer the gain. According to Section 1033 the TP must replace the land with property similar or related in use or service. How much latitude does he have as far what type of land he buys? Secondly, even though the TP receives cash from DOT, can the TP finance the replacement property and use the cash elsewhere?

    Mark
    Tags: None
    #2
    Like-Kind Exchanges Under IRC Code Section 1031 | Internal Revenue Service
    http://www.irs.gov/uac/Like-Kind-Exchanges-Under-IRC-Code-Section-1031
    FS-2008-18, February 2008 — How a business can defer reporting and paying tax on a capital gain by reinvesting the proceeds in property similar to what the business- sold.


    Please look this over. It may qualify if done correctly.
    Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDR

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      #3
      Thanks for responding. After further looking Pub 544 page 9 was very helpful. It says " You do not have to use the actual funds from the condemnation award to acquire the replacement property." That same page gives additional guidance on replacement property.

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