Arkansas Administrative Code
Agency 006 - Department of Finance and Administration
Division 05 - Division of Revenues
Regulation 1997-4 - Comprehensive Individual Income Tax Regulations
Rule 26-51-412 - GAIN OR LOSS - EXCHANGE OF PROPERTY
Rule 4.26-51-412(a) - Property Acquired as a Result of an Involuntary Conversion

In the case of property acquired as a result of an involuntary conversion, the basis of the property shall be the same as in the case of the property so converted, decreased in the amount of any money received by the taxpayer which was not expended, and increased in the amount of the gain or decreased in the amount of loss to the taxpayer recognized upon such conversion applicable to the year in which the conversion was made. Refer to 1. 26-51-404(b)(1).

In any case where the taxpayer elects to replace or restore the converted property, but it is not practicable to do so immediately, he may obtain permission to establish a replacement fund in his accounts in which part or all of the compensation so received shall be held, without deduction for the payment of any mortgage. In such a case the taxpayer should make application to the Director for permission to establish such a replacement fund, and in his application should recite all the facts relating to the transaction and declare that he will proceed as expeditiously as possible to replace or restore such property. The taxpayer will be required to furnish a bond with such surety as the Director may require in an amount not in excess of double the estimated additional income taxes which would be payable if no replacement fund were established. The estimated additional taxes, for the amount of which the claimant is required to furnish security, should be computed at the rates at which the claimant would have been obliged to pay, taking into consideration the remainder of his net income and resolving against him all matters in dispute affecting the amount of the tax. Only surety companies will be approved as sureties. The application should be executed in triplicate, so that the Director, the applicant, and the surety or depository may each have a copy.