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CPAINNJ
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Joined: 10 Jul 2009
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Posts: 423

Posted: 12 Jul 2009 at 08:19 \| IP Logged

Why do they use Net Book Value for calculating basis of involuntary conversion , shouldn't the FMV be used?

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kj_nyc
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Joined: 05 Jun 2009
Location: United States
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Posted: 12 Jul 2009 at 09:37 \| IP Logged

Nope, you're thinking GAAP instead of tax. For tax, if you have an involuntary conversion and you use proceeds to buy replacement, "similar" property, treatment is same as if you had a like-kind exchange, where new basis = carryover basis + boot paid + gain recognized - boot received - loss recognized.

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