Michael H. Johnson and Patricia E. Johnson - Page 11

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          the 23d Street property.  Mr. Johnson relocated to the Lancaster            
          Auto Mall immediately upon vacating the 23d Street property.                
          Petitioners' 1992 Tax Returns                                               
               Petitioners filed a Form 4868, 1992 Application for                    
          Automatic Extension of Time to File U.S. Individual Income Tax              
          Return.  On April 15, 1993, respondent received the Form 4868.              
          On August 13, 1993, petitioners filed their 1992 tax return.                
                                       OPINION                                        
          I.   Section 1033                                                           
               As a general rule, gain realized from the sale or other                
          disposition of property must be recognized.  Sec. 1001(c).                  
          Section 1033 provides an exception to this rule.  If property, as           
          a result of condemnation or threat or imminence thereof, is                 
          compulsorily or involuntarily converted into money, no gain shall           
          be recognized if (1) the taxpayer elects nonrecognition                     
          treatment, (2) the taxpayer purchases property similar or related           
          in service or use to the property converted within the statutory            
          time limit, and (3) the cost of the replacement property equals             
          or exceeds the amount realized on the conversion.  Sec. 1033(a).            
               Section 1033 is a relief provision enacted to allow a                  
          taxpayer to replace property involuntarily converted without                
          recognizing any gain resulting from that conversion.  John                  
          Richard Corp. v. Commissioner, 46 T.C. 41, 44 (1966).  As a                 
          relief provision, this section is construed liberally to achieve            





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