Vera owns an office building that she leases to tenants. If the building is destroyed by a tornado, is thefunctional use testor thetaxpayer use testapplied as to replacement property?

Complete the statements below regarding the test Vera should use and the difference between the two.

• Because Vera is an (investor-user )(owner-investor)( owner-user) rather than (aninvestor-user )(owner-investor)( owner-user) the (functional use test) (taxpayer use test) applies. As such, Vera's use of the replacement property must be (the same as the)(similar in the relationship of the services or) use of the involuntarily converted property. Therefore, the (functional use test )(taxpayer use test)provides the taxpayer with greater flexibility in terms of qualifying replacement property.