Involuntary Conversion: Pre-1/3/2000

Note: This Disposal Method is available as a disposal option if the disposal date is before 1/3/2000. See Like-Kind Exchanges and Involuntary Conversions Overview for exchanges after 1/2/2000.

When you involuntarily retire an asset due to breakdown, condemnation, or reasons other than casualty, classify the disposal as an involuntary conversion. You can compensate for an involuntary conversion by a condemnation award or other means, which can produce a taxable gain unless you acquire a similar asset for replacement. By default, the system does not recognize the gain or loss from an involuntary conversion except in the user books.

In 2000, the IRS issued new guidelines concerning property received in an involuntary conversion. Use this disposal method for an involuntary conversion that occurred before 1/3/2000, and therefore does not require the use of the new guidelines.