§1033 Election Letter Template
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Statement of Election Under IRC §1033
Involuntary Conversion — Eaton Fire
Taxpayer Name(s):
Social Security Number(s):
Tax Year: 2025
Address of Destroyed/Damaged Property:
Pursuant to IRC §1033(a)(2) and the regulations thereunder, the taxpayer(s) named above hereby elect(s) to defer recognition of gain from the involuntary conversion of the above-referenced property.
1. Nature of the Involuntary Conversion
The above-referenced property was destroyed/damaged as a result of the Eaton Fire (January 2025), which has been declared a federal disaster. The conversion occurred during the tax year ended December 31, 2025.
2. Description of Converted Property
The converted property is a single-family residence located at the address above, which served as the taxpayer(s)' principal residence. The property had an adjusted basis of approximately $ as of the date of conversion.
3. Proceeds Received
The taxpayer(s) received insurance proceeds of $ from in connection with the destruction of the property. The taxpayer(s) also expect to receive additional amounts from Southern California Edison in connection with its potential liability for the fire, anticipated in approximately .
4. Amount of Gain
Total realized gain from insurance proceeds is approximately $, of which $ is excluded under IRC §121 (primary residence exclusion, MFJ). The taxable gain from insurance proceeds, prior to this election, is approximately $. Additional gain may be realized upon receipt of the Edison settlement, the amount of which is not yet determinable. The taxpayer(s) elect to defer recognition of all qualifying gain pending reinvestment.
5. Replacement Property
The taxpayer(s) intend to acquire replacement property of like kind or qualifying character under IRC §1033 within the replacement period. The replacement period ends on the later of (a) two years after the close of the first taxable year in which any part of the gain is realized, or (b) four years after the close of the tax year in which the involuntary conversion occurred (as extended for presidentially declared disaster areas). Under present law, the replacement period for this election extends through December 31, .
6. Open Transaction
Because the Edison settlement has not been determined and may result in additional gain from the same involuntary conversion, the taxpayer(s) are treating this as an open transaction and will report any additional gain in the year of receipt. This election is intended to apply to all proceeds from the involuntary conversion, including any subsequent Edison settlement payments attributable to property damage.
7. Election
The taxpayer(s) hereby elect(s) under IRC §1033(a)(2) to recognize no gain on this involuntary conversion to the extent that the conversion proceeds are reinvested in qualifying replacement property within the applicable replacement period. The taxpayer(s) agree to notify the IRS if the replacement property is not acquired within the required period.
Under penalties of perjury, I declare that I have examined this statement and, to the best of my knowledge and belief, it is true, correct, and complete.
Taxpayer signature: _____________________________________ Date: ____________
Spouse signature (if applicable): ________________________ Date: ____________
Preparer signature: _____________________________________ Date: ____________
Preparer name/PTIN:
About this election
The §1033 election must be attached to the first filed return that reports the involuntary conversion event. It is not a separate IRS form — it is a written statement. The language above reflects current practice for residential involuntary conversions under §1033(a)(2). The four-year replacement period applies to presidentially declared disaster areas. California conforms to federal §1033 treatment. This template does not constitute tax advice.