Electronic Filing Services

The conversion of property into money under circumstances beyond the control of the owner. For example: (1) property that is destroyed and “converted” into an insurance settlement or (2) property that is seized by the government and “converted” into a condemnation award. Owners may avoid tax on any gain that may result (if the insurance settlement or condemnation award exceeds the adjusted basis of the property) by reinvesting in similar property within certain time limits.