1033 Exchange replacement property

I have a client that lost a piece of property to an involuntary conversion by way of eminent domain.

The government took part of the land that the client's hotel sits on.

My question is can they reinvest that money into the hotel and consider that replacement of the property taken, since it all involves the hotel, and it's operations?

I think not, but I wanted to see if you all know different.

Can you post some numbers, like basis of land and proceeds of conversion? Was an actual part of the land taken, or was it an easement? Did you allocate the land basis to the part taken, and if so, how?

1033(i)

Doug M, a man of few words and no punctuation, says "1033(i)". I say that, if 1033 applies, then (i) does not get triggered, because (i) is about replacement property being acquired from a related person. We don't know, based on OP, whether the property is owned by an individual or an entity, but regardless, again only if 1033 applies here, the hotel owner would be "acquiring " the replacement property by "investing" the money into the hotel, which I take to mean adding capital improvements to the hotel, which I further take to mean buying improvements from an unrelated party, such as a contractor. So (i) would not be the problem.

But there is a potential problem, 1033(a)(2)(A), because it speaks of other property similar or related in service or ues, etc., within a specified time, etc., for the purpose of replacing the property so converted, etc. I'm trying to understand how improvements to the hotel would be to replace part of the land on which the hotel sits. There are some rulings that can be read as rather favorable by interpreting that requirement liberally, but so far I have not seen one that supports OP's desired result.

Don't know what happened to Noobie, but maybe he'll be back to enlighten us. Plus to answer post #2, conceivably mooting the other issues.

"...reinvest that money into the hotel..." - as in the OP - doesn't really tell us if there was some *property* acquired in the reinvestment, which is, I think, one of the basic requirements of a "successful" Section 1033 transaction. What about it, Noob?

Noob is AWOL.