26 U.S.C. § 1397B | Nonrecognition of gain on rollover of empowerment zone investments

(a)

Nonrecognition of gain

In the case of any sale of a qualified empowerment zone asset held by the taxpayer for more than 1 year and with respect to which such taxpayer elects the application of this section, gain from such sale shall be recognized only to the extent that the amount realized on such sale exceeds—

(1)

the cost of any qualified empowerment zone asset (with respect to the same zone as the asset sold) purchased by the taxpayer during the 60-day period beginning on the date of such sale, reduced by

(2)

any portion of such cost previously taken into account under this section.

(b)

Definitions and special rules

For purposes of this section—

(1)

Qualified empowerment zone asset

(A)

In general

1 See References in Text note below.

1The term “qualified empowerment zone asset” means any property which would be a qualified community asset (as defined in section 1400F)  if in section 1400F —

(i)

references to empowerment zones were substituted for references to renewal communities,

(ii)

references to enterprise zone businesses (as defined in section 1397C) were substituted for references to renewal community businesses,

(iii)

December 31, 2001 the date of the enactment of this paragraph were substituted for “” each place it appears, and

(iv)

January 1, 2010 the day after the date set forth in section 1391(d)(1)(A)(i) were substituted for “” each place it appears.

(B)

References

Any reference in this paragraph to section 1400F shall be treated as reference to such section before its repeal.

(2)

Certain gain not eligible for rollover

This section shall not apply to—

(A)

any gain which is treated as ordinary income for purposes of this subtitle, and

(B)

any gain which is attributable to real property, or an intangible asset, which is not an integral part of an enterprise zone business.

(3)

Purchase

A taxpayer shall be treated as having purchased any property if, but for paragraph (4), the unadjusted basis of such property in the hands of the taxpayer would be its cost (within the meaning of section 1012).

(4)

Basis adjustments

If gain from any sale is not recognized by reason of subsection (a), such gain shall be applied to reduce (in the order acquired) the basis for determining gain or loss of any qualified empowerment zone asset which is purchased by the taxpayer during the 60-day period described in subsection (a). This paragraph shall not apply for purposes of section 1202.

(5)

Holding period

For purposes of determining whether the nonrecognition of gain under subsection (a) applies to any qualified empowerment zone asset which is sold, the taxpayer’s holding period for such asset and the asset referred to in subsection (a)(1) shall be determined without regard to section 1223.

(c)

Termination

December 31, 2020This section shall not apply to sales in taxable years beginning after .

Pub. L. 106–554, § 1(a)(7) [title I, § 116(a)(3)]Dec. 21, 2000114 Stat. 2763 Pub. L. 113–295, div. A, title II, § 206(c)Dec. 19, 2014128 Stat. 4027 Pub. L. 115–141, div. U, title IV, § 401(d)(4)(B)(vii)Mar. 23, 2018132 Stat. 1209 Pub. L. 116–260, div. EE, title I, § 118(c)Dec. 27, 2020134 Stat. 3051(Added , , , 2763A–602; amended , , ; , (5)(B)(iv), (v), , , 1210; , , .)

Editorial Notes

References in Text

Pub. L. 106–554Dec. 21, 2000The date of the enactment of this paragraph, referred to in subsec. (b)(1)(A)(iii), is the date of enactment of , which was approved .

Pub. L. 115–141, div. U, title IV, § 401(d)(5)(A)Mar. 23, 2018132 Stat. 1210Section 1400F, referred to in subsec. (b)(1), was repealed by , , .

Prior Provisions

section 1397C of this titleA prior section 1397B was renumbered .

Amendments

Pub. L. 116–2602020—Subsec. (c). added subsec. (c).

Pub. L. 115–141, § 401(d)(5)(B)(iv)2018—Subsec. (b)(1)(B). , added subpar. (B).

Pub. L. 115–141, § 401(d)(4)(B)(vii), struck out subpar. (B). Text read as follows: “The District of Columbia Enterprise Zone shall not be treated as an empowerment zone for purposes of this section.”

Pub. L. 115–141, § 401(d)(5)(B)(v)Subsec. (b)(5). , substituted “which is sold, the taxpayer’s holding period for such asset and the asset referred to in subsection (a)(1) shall be determined without regard to section 1223.” for “which is sold—

“(A) the taxpayer’s holding period for such asset and the asset referred to in subsection (a)(1) shall be determined without regard to section 1223, and

“(B) only the first year of the taxpayer’s holding period for the asset referred to in subsection (a)(1) shall be taken into account for purposes of paragraphs (2)(A)(iii), (3)(C), and (4)(A)(iii) of section 1400F(b).”

Pub. L. 113–2952014—Subsec. (b)(1)(A)(iv). added cl. (iv).

Statutory Notes and Related Subsidiaries

Effective Date of 2020 Amendment

Pub. L. 116–260Dec. 31, 2020section 118(e) of div. EE of Pub. L. 116–260 section 1391 of this titleAmendment by applicable to taxable years beginning after , see , set out as a note under .

Effective Date of 2014 Amendment

Pub. L. 113–295 Pub. L. 111–312 section 206(d) of Pub. L. 113–295 section 32 of this titleAmendment by effective as if included in the provisions of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, , to which such amendment relates, see , set out as a note under .

Effective Date

Dec. 21, 2000Pub. L. 106–554 section 1016 of this titleSection applicable to qualified empowerment zone assets acquired after , see section 1(a)(7) [title I, § 116(c)] of , set out as an Effective Date of 2000 Amendment note under .

Savings Provision

section 401(d)(4)(B)(vii) of Pub. L. 115–141Jan. 1, 2012section 401(d)(4)(C) of Pub. L. 115–141 section 1400 of this titleAmendment by not applicable to certain obligations issued, DC Zone assets acquired, or principal residences acquired before , see , set out as a note under former .

Pub. L. 115–141Jan. 1, 2010section 401(d)(5)(C) of Pub. L. 115–141 section 1400E of this titleAmendment by section 401(d)(5)(B)(iv), (v) of not applicable to certain qualified community assets acquired, wages paid or incurred, qualified revitalization buildings placed in service, or property acquired before , see , set out as a note under former .

Pub. L. 115–141Mar. 23, 2018Mar. 23, 2018section 401(e) of Pub. L. 115–141 section 23 of this titleFor provisions that nothing in amendment by be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to , for purposes of determining liability for tax for periods ending after , see , set out as a note under .