CPA Study Group
Is this question outdated? Wouldn't there be no casualty gain under the Tax Cuts and Jobs Act law?
Hi, Even after the said law also the exemptions of HIDE IT is still applicable (Mnemonic as per Becker Review Material). In such case of Involuntary Conversions, the revised basis is the NBV or the old basis only. The only adjustment will the additional out of pocket cash paid. Hence the adjusted basis will be 12,000 plus 1,000 and thereby the gain in the second year will be 24,000 less 13,000 i.e. 11,000.