Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 69-53

1969-1 C.B. 199

Sec. 1033

IRS Headnote

The voluntary sale of a warehouse, one of two properties separately owned by related taxpayers, does not constitute an involuntary conversion even though the other property is sold under threat of condemnation.

Full Text

Rev. Rul. 69-53

In 1968 A owned 51 percent of the stock of a manufacturing company and his sons B and C each owned 241/2 percent of the stock of the company. The company rented its manufacturing plant from A and rented an adjacent warehouse from B.

During 1968 the manufacturing plant under threat of condemnation, was sold to the State Highway Department and A realized a substantial gain. Because of the forced relocation of the manufacturing operations it was no longer practicable for the company to use the warehouse and B voluntarily sold it at a substantial gain.

Held, the voluntary sale of the warehouse by B did not constitute an involuntary conversion within the meaning of section 1033 of the Internal Revenue Code of 1954 and his realized gain on the sale of the warehouse is recognized in the year of the sale.

Compare Revenue Ruling 59-361, C.B. 1959-2, 183, which relates only to the voluntary sale of property that is a part of an economic unit owned by the same taxpayer.