§1033 — Involuntary conversions

947 (1957), overruled by Commissioner v .

We need not decide this issue, however, because petitioners' income from the sale of the -permanent easement regarding the residential portion of the property is exempt under section 121 up to $500,000.

We hold that that transaction was a sale of securities by petitioner Jonathan S.

We hold that the construction in 1987 of Willson's parking lots--including the filling of the pond, the grading, and the installation of lights--and sewage system are "land improvements." See Rev.

1033 provides, in pertinent part, as follows: (a) SEC.

Furthermore, because petitioner apparently does not contend that nonrecognition treatment pursuant to section 1033 or 1034 is warranted, we need not reach respondent’s position thereon.

Internal Revenue Code in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. Petitioners concede that the destruction of the original house does not qualify as an involuntary conversion under sec. 1033. Petitioners further concede a $12,010 operating loss adjustment. The previous owner of the house had converted the first level from a two-car garage to living quarters in 1972. The record does not establish whether the new building and perm

Lukinovich discussed section 1033 and the income deferral benefits it extended to landowners in involuntary conversion proceedings .

(2) Are petitioners entitled to nonrecognition treatment under section 1033 with respect to certain gain realized by OIP during the taxable year ended February 28, 1991, as a result of the condemnation of certain real property?

- 2 - under section 1033;1 and (2) whether petitioners are liable for an accuracy-related penalty pursuant to section 6662(a).

If we decide that section 1033 permits the use of multiple replacement periods, we must then decide whether petitioners replaced converted property with qualified replacement property.

Whether the Babcock Road and Warfield Drive properties qualify under section 1033 as replacement property for property sold under threat of condemnation.

MIC reported that it was electing not to recognize this gain in accordance with section 1033, and that it had purchased other property similar to or related in use in an amount greater than the gain.

Our conclusion is consistent with section 1033, which provides rules for determining whether gain realized upon the involuntary conversion of property must be recognized for Federal income tax purposes.

Furthermore, because petitioner apparently does not contend that nonrecognition treatment pursuant to section 1033 or 1034 is warranted, we need not reach respondent’s position thereon.

The substantive issues in Johnson I were: (1) Whether petitioners were entitled to defer recognition of gain on the disposition of certain property pursuant to section 1033; (2) whether petitioners were liable for the fraud penalty pursuant to section 6663(a), or, in the alternative, the accuracy-related penalty pursuant to section 6662(a) for 1992; and (3) whether petitioners were liable for the addition to tax for failure to file timely their return for 1992.

This evidence, however, does not address the threshold element of the two section 1033 prerequisites to nonrecognition treatment.

is not warranted where only the real estate, and not the corporations, was subject to condemnation. Third, respondent argues that the discount is not warranted where both corporations could avoid, and did indeed avoid, the recognition of gain under section 1033. As previously stated, ordinarily a sale within a reasonable time before or after the valuation date is the best criteria of - 11 - market value. See Estate of Scanlan v. Commissioner, T.C. Memo. 1996-331, affd. without published opinion

Federal income tax.1 The issues for decision are: (1) Whether petitioners are entitled to defer recognition of gain on the disposition of property located at 45640 North 23d Street West in Lancaster, California (the 23d Street property), pursuant to section 1033; (2) whether petitioners are liable for the fraud penalty pursuant to section 6663(a), or, in the alternative, whether petitioners are liable for the accuracy-related penalty pursuant to section 6662(a) for 1992; and (3) whether petition

n with the condemnation proceedings. Petitioners did not claim the expenses on their 1989 return, since they believed the fees were not deductible because they were attributable to a condemnation award eligible for nonrecognition of gain pursuant to section 1033. Respondent determined in the notice of deficiency for 1989 that petitioners had unreported dividend income of $1,677. However, on brief, respondent conceded that for 1989 petitioners had unreported dividend income of only $573. In Wilso

n with the condemnation proceedings. Petitioners did not claim the expenses on their 1989 return, since they believed the fees were not deductible because they were attributable to a condemnation award eligible for nonrecognition of gain pursuant to section 1033. Respondent determined in the notice of deficiency for 1989 that petitioners had unreported dividend income of $1,677. However, on brief, respondent conceded that for 1989 petitioners had unreported dividend income of only $573. In Wilso

T.C. Memo. 1997-252 UNITED STATES TAX COURT SHIZUO GEORGE KURATA, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 5515-95. Filed June 4, 1997. 1. Held: Gain recognized because P failed to prove sec. 1033, I.R.C., involuntary conversion of property. 2. Held, further, deductions denied for miscellaneous employee business expenses and for moving expenses because P failed to substantiate such expenditures. 3. Held, further, sec. 6651(a)(1), I.R.C., addition to tax for failure t

The issues for decision are: (1) Whether petitioners must recognize the entire gain from the sale of 100,000 shares of WalMart stock - 2 - in January 1989 even though they "repurchased" 96,600 shares of WalMart in December 1989, and alternatively (2) whether the sale and "repurchase" of the stock qualifies as an involuntary conversion under section 1033.1 At the time of the filing of the petition, Richard and Dolores Hutcheson, petitioners, resided in Fresno, California.

a plan of reorganization, the evidence clearly indicates that FSRC adopted a plan of complete liquidation. Alternatively, petitioner contends that the transaction qualifies for nonrecognition treatment under the involuntary conversion provisions of section 1033. Section 1033 provides for nonrecognition of gain if property is compulsorily or involuntarily converted into property similar or related in service or use to the property so converted. Sec. 1033(a)(1). Included within this provision is

under section 6653(a)(1) and (2) for 1985 and section 6653(a)(1)(A) and (B) for 1986 and 1987; and 1 Petitioner conceded before trial that the gain attributable to a 1986 condemnation award which her husband received was not properly deferred under sec. 1033. On brief, petitioner conceded that the proceeds from a 1985 involuntary conversion were also not properly deferred under sec. 1033. Petitioner concedes that these amounts are properly taxable to Mr. Acquaviva. 2 All section references are t

Year Deficiency 6651(a)(1) 6662(a) 1989 $28,496.00 -0- $5,699.00 - 2 - 1990 28,316.93 $7,293.98 5,663.39 After concessions,1 the issues for decision are: (1) Whether petitioners can defer recognition of gain realized on receipt of condemnation proceeds in taxable year 1989 under authority of section 1033.2 We hold they may not.

1520, 1626–28. The changes to sections 902, 960, and 78 were substantive, and Congress made them effective “in respect of any distribution received by a domestic corporation” before or after specified dates. Tax Reform Act of 1976 § 1033(c), 90 Stat. at 1628. This was an interesting choice because, as counsel for the Commissioner a

Filler’s arguments are based largely on irrelevant cases and secondary sources, misapplied Code sections (e.g., section 1033--a gain deferral provision--and section 1231--a characterization provision), and outdated versions of the Code.

- 3 - [*3] received with respect to the bonds is not excludible under section 1033 and (2) no deduction is allowable on the financing ofthe bonds which accrues during the period beginning on the date the facility is not used for tax-exempt purposes and ending on the date such facility is so used under section 150(b)(4).4 Petitioner's claims were assigned two claim numbers: (1) the question as to the tax-exempt status

1033 (any gain from a condemnation award is not recognized if the money is reinvested in a similar property). We had to figure out whetherthe condemnation award for the taxpayer's fixtures "should be treated for purposes ofFederal income taxation as reimbursement ofmoving expenses or as money into which propertyhas been converted." Buffalo Wir

1033 (any gain from a condemnation award is not recognized if the money is reinvested in a similar property). We had to figure out whether the condemnation award for the taxpayer’s fixtures “should be treated for purposes of Federal income taxation as reimbursement of moving expenses or as money into which property has been converted.” Buffalo

on October 25, 2006. On October 24, 2007, the superior court entered a judgment in condemnation providing for the sale ofthe apartment building to the school district for $720,000. Petitioner did not purchase replacementproperty within the meaning ofsection 1033. Petitioner's Income Tax Reporting Petitioner did not receive an extension oftime to file his 2007 Federal income tax return. Petitioner filed a Form 1040, U.S. Individual Income Tax Return, for 2007 on October 13, 2008. Petitioner filed

ndent Docket No. 243-97. Filed December 11, 2002. Ps were successful in this Court in showing that a $130,000 payment received in settlement of an insurance claim was not for punitive damages and that any gain realized would not be recognized under sec. 1033, I.R.C. Ps seek to recover litigation costs under sec. 7430, I.R.C. The parties disagree about one of the prerequisites to recovery--whether Ps exhausted their administrative remedies before the Internal Revenue Service. Sec. 7430(b)(1), I.R

However, section 1031(a) does not go so far in implementing this notion as to be a reinvestment rollover provision, like section 1033 or section 1034.

Dasco elected to defer recognition of the gain from the condemnation sale according to the provisions of section 1033 and, therefore, did not report the gain on its U.S.

Petitioners argue that since the insurance proceeds were reinvested in qualifying property under section 1033 the full amount of the economic loss should be deductible.

However, section 1031(a) does not go so far in implementing this notion as to be a reinvestment rollover provision, like section 1033 or section 1034.

Section 703(a) provides that with exceptions "The taxable income of a partnership shall be computed in the same manner as in the case of an individual".

prepared the 1989 return. Before Ms. Whitfield's preparation of the 1989 return, Mr. Wickersham told Ms. Whitfield that he had sold the Peveto under threat of condemnation. After learning of this, Ms. Whitfield researched the deferral of gain under section 1033. After researching the issue, she called Mr. Wickersham and told him that she needed confirmation of the threat of condemnation. Mr. Wickersham gave Ms. Whitfield Mr. Dies' letter of condemnation. Ms. Whitfield relied on Mr. Dies' letter

(Emphasis added.) For section 1033 purposes, when a partnership is involved, the taxpayer is the partnership.

is control, is no longer useful or available to him for his [purposes]" quoting C.G. Willis, Inc. v. Commissioner, 41 T.C. 468, 476 (1964), affd. 342 F.2d 996 (3d Cir. 1965), which involved nonrecognition of gain upon an involuntary conversion under section 1033. Petitioner also quotes a similar definition - 12 - of an involuntary conversion in Grant Oil Tool Co. v. United States, 180 Ct. Cl. 620, 381 F.2d 389, 395 (1967), which provides that an involuntary conversion of property occurs for purp

that interest received by the taxpayer in connection with a condemnation award must be included in the taxpayer's income even though the gain that the taxpayer realized as a result of the condemnation was subject to the nonrecognition provisions of section 1033. Generally, any portion of a judgment that compensates a taxpayer for the delay in receipt, or lost - 6 - use, of the taxpayer's money constitutes interest and is taxable as such. Kieselbach v. Commissioner, 317 U.S. 399, 403 (1943). The

s control, is no longer useful or available to him for his [purposes]”, quoting C.G. Willis, Inc. v. Commissioner, 41 T.C. 468, 476 (1964), affd. 342 F.2d 996 (3d Cir. 1965), which involved nonrecognition of gain upon an involuntary conversion under section 1033. Petitioner also quotes a similar definition of an involuntary conversion in Grant Oil Tool Co. v. United States, 180 Ct. Cl. 620, 381 F.2d 389, 395 (1967), which provides that an involuntary conversion of property occurs for purposes of

- 7 - destruction of petitioners' residence as a disposition finds support in the involuntary conversion provisions of section 1033, which treat casualties in the same manner as condemnations, and in the provisions dealing with the limitation of the deduction for casualty losses under section 165(h), which specify that personal casualty gains in excess of losses shall be treated as gains from the sale of the property.

We note that our treatment of the destruction of petitioners’ residence as a disposition finds support in the involuntary conversion provisions of section 1033, which treat casualties in the same manner as condemnations, and in the provisions dealing with the limitation of the deduction for casualty losses under section 165(h), which specify that personal casualty gains in excess of losses shah, be treated as gains from the sale of the property.