When does the replacement period end for an involuntary conversion?

Involuntary conversions refer to situations where property is unexpectedly destroyed or taken, such as through natural disasters or condemnation. According to the U.S. tax code, taxpayers are typically allowed to defer recognition of gain from an involuntary conversion if they replace the converted property within a specified timeframe.

The replacement period for an involuntary conversion is generally set at two years from the date of the conversion event. For property that was converted due to a federally declared disaster, the replacement period can be extended to three years. However, in the context of most involuntary conversions and typical circumstances not influenced by special extensions, the two-year timeframe applies.

In this case, if the conversion occurred on December 31, 2024, the replacement period would logically end two years later, on December 31, 2026. This aligns with the requirements outlined in the tax law regarding the replacement of property involved in an involuntary conversion. Therefore, December 31, 2026, is the appropriate answer as it marks the interval in which a taxpayer must act to replace their property to defer any recognizably taxable gains.