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During the course of operating a farm or ranch, operators will get rid of, lose, or dispose of property used in the business in a variety of ways. Sometimes events beyond the control of the business result in disposition of property. The purpose of this discussion is to illustrate correct income tax reporting when business properties are disposed of due to an involuntary conversion or casualty that may occur suddenly and is beyond management’s control.
This discussion will focus on the involuntary conversion of tangible personal property (i.e., equipment and vehicles), which may be the result of a casualty loss event. The point of the discussion is to enhance the reader’s understanding of correct income tax reporting of sales and replacement purchases as a result of an involuntary conversion. Involuntary conversions of real estate are discussed briefly.
Rural Tax Education
involuntary, conversion, business assets
Education | Higher Education | University Extension
van der Hoeven, Guido, "Involuntary Conversion of Business Assets" (2016). Rural Tax Education. 17.