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sale was not an “involuntary conversion” within the meaning of
section 1033 so that the gain had to be recognized and could not
be deferred. In so holding, it was explained that the damage to
the taxpayer’s ship was insufficient to compel the taxpayer to
sell and, accordingly, the sale was not involuntary. Id. at 476.
In that setting, “involuntary conversion” under section 1033 was
defined to mean “that the taxpayer’s property, through some
outside force or agency beyond his control, is no longer useful
or available to him for his purposes.” Id.; see also Wheeler v.
Commissioner, 58 T.C. 459, 462-463 (1972) (where it was held that
the taxpayer’s choice to destroy his building was not an
involuntary conversion).
In S.H. Kress & Co. v. Commissioner, 40 T.C. 142, 153
(1963), we held that condemnation of the taxpayer’s property was
imminent and unavoidable, and that the only realistic
alternatives were to either await condemnation or to sell to an
appropriate buyer. We found that those circumstances met the
“compulsorily or involuntarily converted” requirement of section
1033, (citing Masser v. Commissioner, 30 T.C. 741 (1958)).
Accordingly, even though a taxpayer has choices or alternatives a
disposition may be deemed involuntary so that section 1033 relief
remains available.
Masser v. Commissioner, supra, involved section 112(f)(1) of
the Internal Revenue Code of 1939 (another predecessor of section
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