Public Law 119-73 (01/23/2026)

26 U.S.C. § 1035

Certain exchanges of insurance policies

(a)

General rules

No gain or loss shall be recognized on the exchange of—
(1)
a contract of life insurance for another contract of life insurance or for an endowment or annuity contract or for a qualified long-term care insurance contract;
(2)
a contract of endowment insurance (A) for another contract of endowment insurance which provides for regular payments beginning at a date not later than the date payments would have begun under the contract exchanged, or (B) for an annuity contract, or (C) for a qualified long-term care insurance contract;
(3)
an annuity contract for an annuity contract or for a qualified long-term care insurance contract; or
(4)
a qualified long-term care insurance contract for a qualified long-term care insurance contract.
(b)

Definitions

For the purpose of this section—
(1)

Endowment contract

A contract of endowment insurance is a contract with an insurance company which depends in part on the life expectancy of the insured, but which may be payable in full in a single payment during his life.

(2)

Annuity contract

An annuity contract is a contract to which paragraph (1) applies but which may be payable during the life of the annuitant only in installments. For purposes of the preceding sentence, a contract shall not fail to be treated as an annuity contract solely because a qualified long-term care insurance contract is a part of or a rider on such contract.

(3)

Life insurance contract

A contract of life insurance is a contract to which paragraph (1) applies but which is not ordinarily payable in full during the life of the insured. For purposes of the preceding sentence, a contract shall not fail to be treated as a life insurance contract solely because a qualified long-term care insurance contract is a part of or a rider on such contract.

(c)

Exchanges involving foreign persons

To the extent provided in regulations, subsection (a) shall not apply to any exchange having the effect of transferring property to any person other than a United States person.

(d)

Cross references

(1)
For rules relating to recognition of gain or loss where an exchange is not solely in kind, see subsections (b) and (c) of section 1031.
(2)
For rules relating to the basis of property acquired in an exchange described in subsection (a), see subsection (d) of section 1031.

Aug. 16, 1954, ch. 73668A Stat. 309Pub. L. 98–369, div. A, title II98 Stat. 756Pub. L. 99–514, title XVIII, § 1828100 Stat. 2851Pub. L. 105–34, title XI, § 1131(b)(1)111 Stat. 979Pub. L. 109–280, title VIII, § 844(b)120 Stat. 1010Pub. L. 115–141, div. U, title IV, § 401(a)(168)132 Stat. 1192(, ; , §§ 211(b)(15), 224(a), , , 776; , , ; , , ; , , ; , , .)

Editorial Notes

Codification

section 1131(b) of Pub. L. 105–34section 684 of this titleAnother enacted .

Amendments

Pub. L. 115–1412018—Subsec. (a)(1). struck out “or” after semicolon at end.

Pub. L. 109–280, § 844(b)(3)(A)2006—Subsec. (a)(1). , which directed amendment by inserting “or for a qualified long-term care insurance contract” before semicolon “at the end”, was executed by making the insertion before “; or” to reflect the probable intent of Congress.

Pub. L. 109–280, § 844(b)(3)(B)Subsec. (a)(2). , which directed amendment by inserting “, or (C) for a qualified long-term care insurance contract” before semicolon “at the end”, was executed by making the insertion before “; or” to reflect the probable intent of Congress.

Pub. L. 109–280, § 844(b)(3)(C)Subsec. (a)(3). , inserted “or for a qualified long-term care insurance contract” after “annuity contract”.

Pub. L. 109–280, § 844(b)(4)Subsec. (a)(4). , added par. (4).

Pub. L. 109–280, § 844(b)(1)Subsec. (b)(2). , inserted at end “For purposes of the preceding sentence, a contract shall not fail to be treated as an annuity contract solely because a qualified long-term care insurance contract is a part of or a rider on such contract.”

Pub. L. 109–280, § 844(b)(2)Subsec. (b)(3). , inserted at end “For purposes of the preceding sentence, a contract shall not fail to be treated as a life insurance contract solely because a qualified long-term care insurance contract is a part of or a rider on such contract.”

Pub. L. 105–341997—Subsecs. (c), (d). added subsec. (c) and redesignated former subsec. (c) as (d).

Pub. L. 99–5141986—Subsec. (b)(1). struck out “subject to tax under subchapter L” after “with an insurance company”.

Pub. L. 98–369, § 224(a)Pub. L. 98–369, § 211(b)(15)1984—Subsec. (b)(1). , which directed the substitution of “an insurance company subject to tax under subchapter L” for “a life insurance company as defined in section 801”, was executed by making such substitution for “a life insurance company as defined in section 816” to reflect the probable intent of Congress and the earlier amendment by , which substituted “as defined in section 816” for “as defined in section 801”.

Pub. L. 98–369, § 211(b)(15), substituted “section 816” for “section 801”.

Statutory Notes and Related Subsidiaries

Effective Date of 2006 Amendment

Pub. L. 109–280Pub. L. 109–280section 72 of this titleAmendment by applicable to contracts issued after , but only with respect to taxable years beginning after , and to exchanges occurring after , see section 844(g)(1), (2) of , set out as a note under .

Effective Date of 1986 Amendment

Pub. L. 99–514Pub. L. 98–369, div. Asection 1881 of Pub. L. 99–514section 48 of this titleAmendment by effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, , to which such amendment relates, see , set out as a note under .

Effective Date of 1984 Amendment

section 211(b)(5) of Pub. L. 98–369section 215 of Pub. L. 98–369section 801 of this titleAmendment by applicable to taxable years beginning after , see , set out as an Effective Date note under .

Pub. L. 98–369, div. A, title II, § 224(b)98 Stat. 776

“The amendment made by subsection (a) [amending this section] shall apply to all exchanges whether before, on, or after the date of the enactment of this Act [].”
, , , provided that:

Plan Amendments Not Required Until January 1, 1989

Pub. L. 99–514section 1140 of Pub. L. 99–514section 401 of this titleFor provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after , see , as amended, set out as a note under .