I.R.C. § 1033(a) General Rule —
If property (as a result of its destruction in whole or in part, theft, seizure,
or requisition or condemnation or threat or imminence thereof) is compulsorily or
involuntarily converted—
I.R.C. § 1033(a)(1) Conversion Into Similar Property —
Into property similar or related in service or use to the property so converted,
no gain shall be recognized.
I.R.C. § 1033(a)(2) Conversion Into Money —
Into money or into property not similar or related in service or use to the converted
property, the gain (if any) shall be recognized except to the extent hereinafter
provided in this paragraph:
I.R.C. § 1033(a)(2)(A) Nonrecognition Of Gain —
If the taxpayer during the period specified in subparagraph
(B), for the purpose of replacing the property so converted, purchases other property
similar or related in service or use to the property so converted, or purchases stock
in the acquisition of control of a corporation owning such other property, at the
election of the taxpayer the gain shall be recognized only to the extent that the
amount realized upon such conversion (regardless of whether such amount is received
in one or more taxable years) exceeds the cost of such other property or such stock.
Such election shall be made at such time and in such manner as the Secretary may
by regulations prescribe. For purposes of this paragraph—
I.R.C. § 1033(a)(2)(A)(i) —
no property or stock acquired before the disposition of the converted property shall
be considered to have been acquired for the purpose of replacing such converted property
unless held by the taxpayer on the date of such disposition; and
I.R.C. § 1033(a)(2)(A)(ii) —
the taxpayer shall be considered to have purchased property or stock only if, but
for the provisions of subsection (b) of this section, the unadjusted basis of such
property or stock would be its cost within the meaning of section 1012.
I.R.C. § 1033(a)(2)(B) Period Within Which Property Must Be Replaced —
The period referred to in subparagraph (A) shall be the period beginning with the
date of the disposition of the converted property, or the earliest date of the threat
or imminence of requisition or condemnation of the converted property, whichever
is the earlier, and ending—
I.R.C. § 1033(a)(2)(B)(i) —
2 years after the close of the first taxable year in which any part of the gain upon
the conversion is realized, or
I.R.C. § 1033(a)(2)(B)(ii) —
subject to such terms and conditions as may be specified by the Secretary, at the
close of such later date as the Secretary may designate on application by the taxpayer.
Such application shall be made at such time and in such manner as the Secretary may
by regulations prescribe.
I.R.C. § 1033(a)(2)(C) Time For Assessment Of Deficiency Attributable To Gain Upon Conversion —
If a taxpayer has made the election provided in subparagraph
(A), then—
I.R.C. § 1033(a)(2)(C)(i) —
the statutory period for the assessment of any deficiency, for any taxable year in
which any part of the gain on such conversion is realized, attributable to such gain
shall not expire prior to the expiration of 3 years from the date the Secretary is
notified by the taxpayer (in such manner as the Secretary may by regulations prescribe)
of the replacement of the converted property or of an intention not to replace, and
I.R.C. § 1033(a)(2)(C)(ii) —
such deficiency may be assessed before the expiration of such 3-year period notwithstanding
the provisions of section 6212(c) or
the provisions of any other law or rule of law which would otherwise
prevent such assessment.
I.R.C. § 1033(a)(2)(D) Time For Assessment Of Other Deficiencies Attributable To Election —
If the election provided in subparagraph (A) is made by the taxpayer and such other
property or such stock was purchased before the beginning of the last taxable year
in which any part of the gain upon such conversion is realized, any deficiency, to
the extent resulting from such election, for any taxable year ending before such
last taxable year may be assessed (notwithstanding the provisions of section 6212(c) or 6501 or the provisions of any other law or rule of law which would otherwise prevent
such assessment)
at any time before the expiration of the period within which a deficiency for such
last taxable year may be assessed.
I.R.C. § 1033(a)(2)(E) Definitions —
For purposes of this paragraph—
I.R.C. § 1033(a)(2)(E)(i) Control —
The term “control” means the ownership of stock possessing at least 80 percent of
the total combined voting power of all classes of stock entitled to vote and at least
80 percent of the total number of shares of all other classes of stock of the corporation.
I.R.C. § 1033(a)(2)(E)(ii) Disposition Of The Converted Property —
The term “disposition of the converted property” means the destruction, theft, seizure,
requisition, or condemnation of the converted property, or the sale or exchange of
such property under threat or imminence of requisition or condemnation.
I.R.C. § 1033(b) Basis Of Property Acquired Through Involuntary Conversion
I.R.C. § 1033(b)(1) Conversions Described In Subsection (a)(1) —
If the property was acquired as the result of a compulsory or involuntary conversion
described in subsection (a)(1), the basis shall be the same as in the case of the
property so converted—
I.R.C. § 1033(b)(1)(A) —
decreased in the amount of any money received by the taxpayer which was not expended
in accordance with the provisions of law (applicable to the year in which such conversion
was made) determining the taxable status of the gain or loss upon such conversion,
and
I.R.C. § 1033(b)(1)(B) —
increased in the amount of gain or decreased in the amount of loss to the taxpayer
recognized upon such conversion under the law applicable to the year in which such
conversion was made.
I.R.C. § 1033(b)(2) Conversions Described In Subsection (a)(2) —
In the case of property purchased by the taxpayer in a transaction described in
subsection (a)(2) which resulted in the nonrecognition of any part of the gain realized
as the result of a compulsory or involuntary conversion, the basis shall be the cost
of such property decreased in the amount of the gain not so recognized;
and if the property purchased consists of more than 1 piece of property, the basis
determined under this sentence shall be allocated to the purchased properties in
proportion to their respective costs.
I.R.C. § 1033(b)(3) Property Held By Corporation The Stock Of Which Is Replacement Property
I.R.C. § 1033(b)(3)(A) In General —
If the basis of stock in a corporation is decreased under paragraph (2), an amount
equal to such decrease shall also be applied to reduce the basis of property held
by the corporation at the time the taxpayer acquired control (as defined in subsection
(a)(2)(E)) of such corporation.
I.R.C. § 1033(b)(3)(B) Limitation —
Subparagraph (A) shall not apply to the extent that it would (but for this subparagraph)
require a reduction in the aggregate adjusted bases of the property of the corporation
below the taxpayer's adjusted basis of the stock in the corporation (determined immediately
after such basis is decreased under paragraph (2)).
I.R.C. § 1033(b)(3)(C) Allocation Of Basis Reduction —
The decrease required under subparagraph (A) shall be allocated—
I.R.C. § 1033(b)(3)(C)(i) —
first to property which is similar or related in service or use to the converted
property,
I.R.C. § 1033(b)(3)(C)(ii) —
second to depreciable property (as defined in section 1017(b)(3)(B))
not described in clause (i), and
I.R.C. § 1033(b)(3)(C)(iii) —
then to other property.
I.R.C. § 1033(b)(3)(D) Special Rules
I.R.C. § 1033(b)(3)(D)(i) Reduction Not To Exceed Adjusted Basis Of Property —
No reduction in the basis of any property under this paragraph shall exceed the
adjusted basis of such property (determined without regard to such reduction).
I.R.C. § 1033(b)(3)(D)(ii) Allocation Of Reduction Among Properties —
If more than 1 property is described in a clause of subparagraph (C), the reduction
under this paragraph shall be allocated among such property in proportion to the
adjusted bases of such property
(as so determined).
I.R.C. § 1033(c) Property Sold Pursuant To Reclamation Laws —
For purposes of this subtitle, if property lying within an irrigation project is
sold or otherwise disposed of in order to conform to the acreage limitation provisions
of Federal reclamation laws, such sale or disposition shall be treated as an involuntary
conversion to which this section applies.
I.R.C. § 1033(d) Livestock Destroyed By Disease —
For purposes of this subtitle, if livestock are destroyed by or on account of disease,
or are sold or exchanged because of disease, such destruction or such sale or exchange
shall be treated as an involuntary conversion to which this section applies.
I.R.C. § 1033(e) Livestock Sold On Account Of Drought, Flood, Or Other Weather-Related Conditions
I.R.C. § 1033(e)(1) In General —
For purposes of this subtitle, the sale or exchange of livestock (other than poultry)
held by a taxpayer for draft, breeding, or dairy purposes in excess of the number
the taxpayer would sell if he followed his usual business practices shall be treated
as an involuntary conversion to which this section applies if such livestock are
sold or exchanged by the taxpayer solely on account of drought, flood, or other weather-related
conditions.
I.R.C. § 1033(e)(2) Extension Of Replacement Period
I.R.C. § 1033(e)(2)(A) In General —
In the case of drought, flood, or other weather-related conditions described in paragraph
(1) which result in the area being
designated as eligible for assistance by the Federal Government,
subsection (a)(2)(B) shall be applied with respect to any converted
property by substituting “4 years” for “2 years”.
I.R.C. § 1033(e)(2)(B) Further Extension By Secretary —
The Secretary may extend on a regional basis the period for replacement under this
section (after the application of subparagraph
(A)) for such additional time as the Secretary determines appropriate if the weather-related
conditions which resulted in such application continue for more than 3 years.
I.R.C. § 1033(f) Replacement Of Livestock With Other Farm Property In Certain Cases —
For purposes of subsection (a), if, because of drought, flood, or other weather-related
conditions, or soil contamination or other environmental contamination, it is not
feasible for the taxpayer to reinvest the proceeds from compulsorily or involuntarily
converted livestock in property similar or related in use to the livestock so converted,
other property (including real property
in the case of soil contamination or other environmental contamination)
used for farming purposes shall be treated as property similar or related in service
or use to the livestock so converted.
I.R.C. § 1033(g) Condemnation Of Real Property Held For Productive Use In Trade Or Business Or For
Investment
I.R.C. § 1033(g)(1) Special Rule —
For purposes of subsection (a), if real property (not including stock in trade or
other property held primarily for sale)
held for productive use in trade or business or for investment is
(as the result of its seizure, requisition, or condemnation, or threat or imminence
thereof) compulsorily or involuntarily converted, property of a like kind to be held
either for productive use in trade or business or for investment shall be treated
as property similar or related in service or use to the property so converted.
I.R.C. § 1033(g)(2) Limitations1
1 heading Should Read “Limitation.”
—
Paragraph (1) shall not apply to the purchase of stock in the acquisition of control
of a corporation described in subsection
(a)(2)(A).
I.R.C. § 1033(g)(3) Election To Treat Outdoor Advertising Displays As Real Property
I.R.C. § 1033(g)(3)(A) In General —
A taxpayer may elect, at such time and in such manner as the Secretary may prescribe,
to treat property which constitutes an outdoor advertising display as real property
for purposes of this chapter. The election provided by this subparagraph may not
be made with respect to any property with respect to which an election under section
179(a) (relating to election to expense certain depreciable business assets) is in effect.
I.R.C. § 1033(g)(3)(B) Election —
An election made under subparagraph (A) may not be revoked without the consent of
the Secretary.
I.R.C. § 1033(g)(3)(C) Outdoor Advertising Display —
For purposes of this paragraph, the term “outdoor advertising display” means a rigidly
assembled sign, display, or device permanently affixed to the ground or permanently
attached to a building or other inherently permanent structure constituting, or used
for the display of, a commercial or other advertisement to the public.
I.R.C. § 1033(g)(3)(D) Character Of Replacement Property —
For purposes of this subsection, an interest in real property purchased as replacement
property for a compulsorily or involuntarily converted outdoor advertising display
defined in subparagraph
(C) (and treated by the taxpayer as real property) shall be considered property of
a like kind as the property converted without regard to whether the taxpayer's interest
in the replacement property is the same kind of interest the taxpayer held in the
converted property.
I.R.C. § 1033(g)(4) Special Rule —
In the case of a compulsory or involuntary conversion described in paragraph (1),
subsection (a)(2)(B)(i) shall be applied by substituting “3 years” for “2 years”.
I.R.C. § 1033(h) Special Rules For Property Damaged By Federally Declared Disasters
I.R.C. § 1033(h)(1) Principal Residences —
If the taxpayer's principal residence or any of its contents is located in a disaster
area and is compulsorily or involuntarily converted as a result of a federally declared
disaster—
I.R.C. § 1033(h)(1)(A) Treatment Of Insurance Proceeds
I.R.C. § 1033(h)(1)(A)(i) Exclusion For Unscheduled Personal Property —
No gain shall be recognized by reason of the receipt of any insurance proceeds for
personal property which was part of such contents and which was not scheduled property
for purposes of such insurance.
I.R.C. § 1033(h)(1)(A)(ii) Other Proceeds Treated As Common Fund —
In the case of any insurance proceeds (not described in clause (i)) for such residence
or contents—
I.R.C. § 1033(h)(1)(A)(ii)(I) —
such proceeds shall be treated as received for the conversion of a single item of
property, and
I.R.C. § 1033(h)(1)(A)(ii)(II) —
any property which is similar or related in service or use to the residence so converted
(or contents thereof) shall be treated for purposes of subsection (a)(2) as property
similar or related in service or use to such single item of property.
I.R.C. § 1033(h)(1)(B) Extension Of Replacement Period —
Subsection (a)(2)(B) shall be applied with respect to any property so converted by
substituting “4 years”
for “2 years”.
I.R.C. § 1033(h)(2) Trade Or Business And Investment Property —
If a taxpayer's property held for productive use in a trade or business or for investment
is located in a disaster area and is compulsorily or involuntarily converted as a
result of a federally declared disaster, tangible property of a type held for productive
use in a trade or business shall be treated for purposes of subsection
(a) as property similar or related in service or use to the property so converted.
I.R.C. § 1033(h)(3) Federally Declared Disaster; Disaster Area —
The terms “federally declared disaster” and “disaster area” shall have the respective
meaning given such terms by section 165(i)(5).
I.R.C. § 1033(h)(4) Principal Residence —
For purposes of this subsection, the term “principal residence” has the same meaning
as when used in section 121, except that such term shall include a residence not treated as a principal residence
solely because the taxpayer does not own the residence.
I.R.C. § 1033(i) Replacement Property Must Be Acquired From Unrelated Person In Certain Cases
I.R.C. § 1033(i)(1) In General —
If the property which is involuntarily converted is held by a taxpayer to which
this subsection applies, subsection (a)
shall not apply if the replacement property or stock is acquired from a related person.
The preceding sentence shall not apply to the extent that the related person acquired
the replacement property or stock from an unrelated person during the period applicable
under subsection (a)(2)(B).
I.R.C. § 1033(i)(2) Taxpayers To Which Subsection Applies —
This subsection shall apply to—
I.R.C. § 1033(i)(2)(A) —
a C corporation,
I.R.C. § 1033(i)(2)(B) —
a partnership in which 1 or more C corporations own, directly or indirectly (determined
in accordance with section 707(b)(3)),
more than 50 percent of the capital interest, or profits interest, in such partnership
at the time of the involuntary conversion, and
I.R.C. § 1033(i)(2)(C) —
any other taxpayer if, with respect to property which is involuntarily converted
during the taxable year, the aggregate of the amount of realized gain on such property
on which there is realized gain exceeds $100,000.
In the case of a partnership, subparagraph
(C) shall apply with respect to the partnership and with respect to each partner.
A similar rule shall apply in the case of an S corporation and its shareholders.
I.R.C. § 1033(i)(3) Related Person —
For purposes of this subsection, a person is related to another person if the person
bears a relationship to the other person described in section 267(b) or 707(b)(1).
I.R.C. § 1033(j) Sales Or Exchanges Under Certain Hazard Mitigation Programs —
For purposes of this subtitle, if property is sold or otherwise transferred to the
Federal Government, a State or local government, or an Indian tribal government to
implement hazard mitigation under the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (as in effect on the date of the enactment of this subsection)
or the National Flood Insurance Act (as in effect on such date), such sale or transfer
shall be treated as an involuntary conversion to which this section applies.
I.R.C. § 1033(k) Cross References
I.R.C. § 1033(k)(1) —
For determination of the period for which the taxpayer has held property involuntarily
converted, see section 1223.
I.R.C. § 1033(k)(2) —
For treatment of gains from involuntary conversions as capital gains in certain cases,
see section 1231(a).
I.R.C. § 1033(k)(3) —
For exclusion from gross income of gain from involuntary conversion of principal
residence, see section 121.
(Aug. 16, 1954, ch. 736, 68A Stat. 303; June 29, 1956,
ch. 464, Sec. 5(a), 70 Stat. 407;
Sept. 2, 1958, Pub. L. 85-866, title I, Sec. 45, 46(a), 72 Stat. 1641;
Feb. 26, 1964, Pub. L. 88-272, title II, Sec. 206(b)(3), 78 Stat. 40;
Dec. 30, 1969, Pub. L. 91-172, title IX, Sec. 915(a), 83 Stat. 723;
Oct. 4, 1976, Pub. L. 94-455, title XIX, Sec. 1901(a)(128), 1906(b)(13)(A), title XXI, Sec. 2127(a), 2140(a),
90 Stat. 1785, 1834, 1920, 1932; Nov. 6, 1978, Pub. L. 95-600, title IV, Sec. 404(c)(4), title V, Sec. 542(a), title VII, Sec. 703(j)(5), 92 Stat. 2870, 2888, 2941; Aug. 13, 1981, Pub. L. 97-34, title II, Sec. 202(d)(2), 95 Stat. 221;
July 18, 1984, Pub. L. 98-369, div. A, title IV, Sec. 474(r)(24), 98 Stat. 844; Nov. 5, 1990, Pub. L. 101-508, title XI, Sec. 11813(b)(20), 104 Stat. 1388-555; Aug. 10, 1993, Pub. L. 103-66, title XIII, Sec. 13431(a), 107 Stat. 312; Apr. 11, 1995, Pub. L. 104-7, Sec. 3; Aug. 20, 1996, Pub. L. 104-188, title I, Sec. 1119(a),
(b), 1610(a), 110 Stat. 1755; Pub. L. 105-34, title III, IX, X, Sec. 312(d), 913(b), 1087(a), Aug. 5, 1997, 111 Stat 788; Oct. 4, 2004, Pub. L. 108-311, title IV, Sec. 408(a)(7)(C), 118 Stat. 1166; Oct. 22, 2004, Pub. L. 108-357, title III, Sec. 311, 118 Stat. 1418; Apr. 15, 2005, Pub. L. 109-7, Sec. 1, 119 Stat. 21; Pub. L. 110-343, div. C, title VII, Sec. 706(a)(2)(D), Oct. 3, 2008, 122 Stat. 3765; Pub. L. 113-295, Div. A, title II, Sec. 211(c)(1), 221(a)(27), 221(a)(77), Dec. 19, 2014, 128 Stat. 4010; Pub. L. 115-141, Div. U, title IV, Sec. 401(a)(167), Mar. 23, 2018, 132 Stat. 348.)
BACKGROUND NOTES
AMENDMENTS
2018--Subsec.
(h)(2). Pub. L. 115-141, Div. U, Sec. 401(a)(167), amended par. (2) by inserting “is”
before “located”.
2014--Subsec. (h)(2). Pub. L. 113-295, Div. A, Sec. 211(c)(1)(A), amended par. (2) by inserting “is” before “compulsory”.
Subsec. (h)(3). Pub. L. 113-295, Div. A, Sec. 221(a)(27)(D), amended par.
(3) by substituting “section 165(i)(5)” for “section 165(h)(3)(C)”.
Subsec. (j)-(l). Pub. L. 113-295, Div. A, Sec. 221(a)(77), struck subsec.
(j) and redesignated subsec. (k) and (l) as subsec. (j) and (k), respectively. Before
being struck, subsec. (j) read as follows:
“(j) Sales Or Exchanges To Implement Microwave Relocation Policy.—
“(A) In General.—For purposes of this subtitle, if a taxpayer elects the application
of this subsection to a qualified sale or exchange, such sale or exchange shall be
treated as an involuntary conversion to which this section applies.
“(2) Qualified Sale Or Exchange.—For
purposes of paragraph (1), the term “qualified sale or exchange”
means a sale or exchange before January 1, 2000, which is certified by the Federal
Communications Commission as having been made by a taxpayer in connection with the
relocation of the taxpayer from the 1850-1990MHz spectrum by reason of the Federal
Communications Commission's reallocation of that spectrum for use for personal communications
services. The Commission shall transmit copies of certifications under this paragraph
to the Secretary.”
2008--Subsec. (h). Pub. L. 110-343, Div. C, Sec. 706(a)(2)(D)(i), amended subsec. (h) by substituting ““(h) Special
Rules for Property Damaged by Federally Declared Disasters.—(1) PRINCIPAL RESIDENCES.—If
the taxpayer's principal residence or any of its contents is located in a disaster
area and is compulsorily or involuntarily converted as a result of a federally declared
disaster—”
for “(h) Principal Residences.— If the taxpayer's principal residence or any of its
contents is compulsorily or involuntarily converted as a result of a Presidentially
declared disaster --”.
Subsec. (h)(2). Pub. L. 110-343, Div. C, Sec. 706(a)(2)(D)(ii), amended par. (2) by substituting “investment located
in a disaster area and compulsorily or involuntarily converted as a result of a federally
declared disaster” for “investment is compulsorily or involuntarily converted as a
result of a Presidentially declared disaster”.
Subsec. (h)(3). Pub. L. 110-343, Div. C, Sec. 706(a)(2)(D)(iii), amended par. (3). Before amendment, it read as follows:
“(3) Presidentially Declared Disaster,—
For purposes of this subsection, the term ‘Presidentially declared disaster’ means
any disaster which, with respect to the area in which the property is located, resulted
in a subsequent determination by the President that such area warrants assistance
by the Federal Government under the Robert T. Stafford Disaster Relief and Emergency
Assistance Act.”
2005--Subsec. (k). Pub. L. 109-7, Sec. 1(b), amended Sec. 1033 by redesignating subsec. (k) as subsec. (l) and adding
a subsec. (k).
2004--Subsec. (e). Pub. L. 108-357, Sec. 311(b), amended subsec. (e) by striking “CONDITIONS- For purposes” and inserting
“CONDITIONS-IN GENERAL-For purposes” and by adding par. (2).
Subsec. (f). Pub. L. 108-357, Sec. 311(a), amended subsec. (f) by substituting
“in certain cases” for “where there has been environmental contamination"
in the heading; by inserting “drought, flood, or other weather-related conditions,
or” after “because of”; and by inserting “in the case of soil contamination or other
environmental contamination” after
“including real property”.
Subsec. (h)(3). Pub. L. 108-311, Sec. 408(a)(7)(C), amended par. (7) by inserting “Robert T. Stafford” before “Disaster
Relief and Emergency Assistance Act”.
1997--Subsec. (e). Pub. L. 105-34, Sec. 913(b) inserted
“, flood, or other weather-related conditions” at the end of the subsection heading,
and before the period at the end of the subsection.
Subsec. (h)(4). Pub. L. 105-34, Sec. 312(d)(1) substituted “section 121"
for “section 1034”.
Subsec. (i). Pub. L. 105-34, Sec. 1087(a) amended subsec. (i) generally. Prior to amendment it read as follows:
“(i) Nonrecognition not to apply if corporation acquires replacement property from
related person.--
“(1) In general.--
In the case of--
“(A) a C corporation, or
“(B) a partnership in which 1 or more C corporations own, directly or indirectly (determined
in accordance with section 707(b)(3)), more than 50 percent of the capital interest,
or profits interest, in such partnership at the time of the involuntary conversion,
subsection (a) shall not apply if the replacement property or stock is acquired from
a related person. The preceding sentence shall not apply to the extent that the related
person acquired the replacement property or stock from an unrelated person during
the period described in subsection (a)(2)(B).
“(2) Related person.--
For purposes of this subsection, a person is related to another person if the person
bears a relationship to the other person described in section 267(b) or 707(b)(1).”
Subsec. (k)(3). Pub. L. 105-34, Sec. 312(d)(7) amended paragraph (3) generally. Prior to amendment it read as follows:
“(3) For one-time exclusion from gross income of gain from involuntary conversion
of principal residence by individual who has attained age 55, see section 121.”
1996 - Subsec. (b). Pub. L. 104-188, Sec. 1610(a), amended subsec. (b). Before amendment, subsec. (b) read as follows:
“(b) Basis of property acquired through involuntary conversion
“If the property was acquired, after February 28, 1913, as the result of a compulsory
or involuntary conversion described in subsection (a)(1) or section 112(f)(2) of the Internal Revenue Code of 1939, the basis shall be the same as in the case of the property so converted,
decreased in the amount of any money received by the taxpayer which was not expended
in accordance with the provisions of law (applicable to the year in which such conversion
was made) determining the taxable status of the gain or loss upon such conversion,
and increased in the amount of gain or decreased in the amount of loss to the taxpayer
recognized upon such conversion under the law applicable to the year in which such
conversion was made. This subsection shall not apply in respect of property acquired
as a result of a compulsory or involuntary conversion of property used by the taxpayer
as his principal residence if the destruction, theft, seizure, requisition, or condemnation
of such residence, or the sale or exchange of such residence under threat or imminence
thereof, occurred after December 31, 1950, and before January 1, 1954. In the case
of property purchased by the taxpayer in a transaction described in subsection (a)(3)
[sic] which resulted in the nonrecognition of any part of the gain realized as the
result of a compulsory or involuntary conversion, the basis shall be the cost of such
property decreased in the amount of the gain not so recognized;
and if the property purchased consists of more than one piece of property, the basis
determined under this sentence shall be allocated to the purchased properties in proportion
to their respective costs.”
Subsec. (h). Pub. L. 104-188, Sec. 1119(b)(2), substituted “property"
for “principal residences” in the heading.
Subsec. (h)(1). Pub. L. 104-188, Sec. 1119(b)(3), substituted “(1) Principal residences” for “(1) In general”.
Subsec. (h)(2)-(4). Pub. L. 104-188, Sec. 1119(a), redesignated pars. (2)
and (3) as pars. (3) and (4), respectively, and added new par. (2).
Subsec. (h)(3) (as redesignated). Pub. L. 104-188, Sec. 1119(b)(1), substituted “residence” for “property”.
1995 - Subsecs. (i), (j). Pub. L. 104-7, Sec. 3(a), redesignated subsection (i) as (j), and inserted a new subsection (i),
effective for involuntary conversions occurring on or after February 6, 1995.
Subsecs. (j), (k). Pub. L. 104-7, Sec. 3(b), redesignated subsection (j)
(as redesignated by Sec. 3(a)) as (k), and inserted a new subsection
(j), effective for sales or exchanges after March 14, 1995.
1993 - Subsec. (h)-(i). Pub. L. 103-66, Sec. 13431(a), redesignated subsec. (h) as subsec. (i) and added a new subsec. (h).
1990 - Subsec. (g)(3)(A). Pub. L. 101-508 struck out ‘with respect to which the investment credit determined under section
46(a)
is or has been claimed or’ after ‘to any property’.
1984 - Subsec. (g)(3)(A). Pub. L. 98-369 substituted ‘the investment credit determined under section 46(a)’ for ‘the credit
allowed by section 38 (relating to investment in certain depreciable property)’.
1981 - Subsec. (g)(3)(A). Pub. L. 97-34 substituted ‘(relating to election to expense certain depreciable business assets)’
for ‘(relating to additional first-year depreciation allowance for small business)’.
1978 - Subsec. (a)(2)(A)(ii). Pub. L. 95-600, Sec. 703(j)(5), substituted
‘subsection (b)’ for ‘subsection (c)’.
Subsecs. (f), (g). Pub. L. 95-600, Sec. 542(a), added subsec. (f) and redesignated former subsecs. (f) and (g) as
(g) and (h), respectively.
Subsec. (h). Pub. L. 95-600, Sec. 404(c)(4), 542(a), redesignated subsec.
(g) as (h) and substituted in par. (3) ‘one-time exclusion’ for ‘exclusion’
and ‘age 55’ for ‘age 65’.
1976 - Subsec. (a)(2), (3). Pub. L. 94-455, Sec. 1901(a)(128)(A),
(B), 1906(b)(13)(A), redesignated par. (3) as (2), struck out in heading
‘where disposition occurred after 1950’ after ‘Conversion into money’, in provisions
preceding subpar. (A) ‘and the disposition of the converted property (as defined in
paragraph (2)) occurred after December 31, 1950,’ after ‘use to the converted property,’
and in subpar. (B)(ii)
‘or his delegate’ after ‘Secretary’ wherever appearing, and added subpar. (E). Former
par. (2), which related to involuntary conversions into money where dispositions occurred
prior to 1951, was struck out.
Subsec. (b). Pub. L. 94-455, Sec. 1901(a)(128)(C), (D), redesignated subsec. (c) as (b) and substituted ‘or section 112(f)(2) of the Internal Revenue Code of 1939' for ‘or
(2)’. Former subsec. (b), which related to application of subsec.
(a) in the case of property used by taxpayer as his principal residence, if the destruction,
theft, etc., occurred after 1950 and before 1954, was struck out.
Subsecs. (c) to (e). Pub. L. 94-455, Sec. 1901(a)(128)(C), redesignated subsecs.
(d) to (f) as (c) to (e), respectively. Former subsec. (c) redesignated
(b).
Subsec. (f). Pub. L. 94-455, Sec. 1901(a)(128)(C), (E), (F), 2127(a), 2140(a), redesignated subsec. (g) as (f),
in par. (2) struck out provisions relating to conversion of real property before Jan.
1, 1958, and substituted reference to subsection (a)(2)(A) for reference to subsection
(a)(3)(A), and added pars. (3) and (4). Former subsec. (f) redesignated (e).
Subsecs. (g), (h). Pub. L. 94-455, Sec. 1901(a)(128)(C), redesignated subsec.
(h) as (g). Former subsec. (g) redesignated (f).
1969 - Subsec. (a)(3)(B). Pub. L. 91-172 substituted ‘2 years’
for ‘one year’.
1964 - Subsec. (h)(3). Pub. L. 88-272 added par. (3).
1958 - Subsec. (a)(2). Pub. L. 85-866, Sec. 45, inserted provision defining ‘control’.
Subsecs. (g), (h). Pub. L. 85-866, Sec. 46(a), added subsec. (g) and redesignated former subsec. (g) as (h).
1956 - Subsecs. (f), (g). Act June 29, 1956, added subsec. (f) and redesignated former
subsec.
(f) as (g).
EFFECTIVE DATE OF 2018 AMENDMENTS
Amendment by Pub. L. 115-141, Div. U, Sec. 401(a)(167), effective March 23, 2018.
EFFECTIVE DATE OF 2014 AMENDMENTS
Amendment by Pub. L. 113-295, Div. A, Sec. 211(c)(1)(A), effective as if included in the provision of the Tax
Extenders and Alternative Minimum Tax Relief Act of 2008 [Pub. L. 110-343, Div. C, Sec. 706] to which it relates
[Effective for disasters declared in taxable years beginning after December 31, 2007].
Amendments by Pub. L. 113-295, Div. A, Sec. 221(a), effective on the date of the enactment of this Act [Enacted:
Dec. 19, 2014].
Section 221(b)(2) of Pub. L. 113-295, Div. A, provided the following Savings Provision:
“(2)
SAVINGS PROVISION.—If—
“(A)
any provision amended or repealed by the amendments made by this section applied to—
“(i)
any transaction occurring before the date of the enactment of this Act [Enacted: Dec.
19, 2014],
“(ii)
any property acquired before such date of enactment, or
“(iii)
any item of income, loss, deduction, or credit taken into account before such date
of enactment, and
“(B)
the treatment of such transaction, property, or item under such provision would (without
regard to the amendments or repeals made by this section)
affect the liability for tax for periods ending after date of enactment, nothing in
the amendments or repeals made by this section shall be construed to affect the treatment
of such transaction, property, or item for purposes of determining liability for tax
for periods ending after such date of enactment.”
EFFECTIVE DATE OF 2008 AMENDMENTS
Amendments by Sec. 706(a)(2)(D) of Pub. L. 110-343, Div. C, effective for disasters declared in taxable years beginning after December
31, 2007.
EFFECTIVE DATE OF 2005 AMENDMENTS
Amendment by Section 1(b) of Pub. L. 109-7 applicable to sales or other dispositions before, on, or after the date of the enactment
of this Act [Enacted: Apr. 15, 2005].
EFFECTIVE DATE OF 2004 AMENDMENTS
Amendment by Section 311 of Pub. L. 108-357 applicable to any
taxable year with respect to which the due date (without regard to extensions)
for the return is after December 31, 2002.
Amendment by Section 408(a)(7)(C) of Pub. L. 108-311 applicable on the date of the enactment of this Act [Enacted: Oct. 4, 2004].
EFFECTIVE DATE OF 1997 AMENDMENTS
Amendment by Section 312 of Pub. L. 105-34 applicable to sales and exchanges after May 6, 1997. Special rules relating to amendments
made by Section 312 of Pub. L. 105-34 are set out under Code Section 121.
Amendment by Section 913(b) of Pub. L. 105-34 applicable to sales and exchanges after December 31, 1996.
Amendment by Section 1087(a) of Pub. L. 105-34 applicable to involuntary conversions occurring after June 8, 1997.
EFFECTIVE DATE OF 1996 AMENDMENTS
Amendment by Pub. L. 104-188, Sec. 1610(a), applicable to involuntary conversions occurring after the date of
the enactment of this Act
[August 20, 1996].
Amendment by Pub. L. 104-188, Sec. 1119, applicable to disasters declared after December 31, 1994 in taxable years
ending after such date.
EFFECTIVE DATE OF 1993 AMENDMENTS
Amendments by Pub. L. 103-66, Sec. 13431(a), effective for property compulsorily or involuntarily converted as a result of disasters
for which the determination referred to in section 1033(h)(2) of the Internal Revenue Code of 1986 (as added by this section) is made on or after September 1, 1991, and to
taxable years ending on or after such date.
EFFECTIVE DATE OF 1990 AMENDMENTS
Amendment by Pub. L. 101-508 applicable to property placed in service after Dec. 31, 1990, but not applicable
to any transition property
(as defined in section 49(e) of this title), any property with respect to which qualified
progress expenditures were previously taken into account under section 46(d) of this
title, and any property described in section 46(b)(2)(C) of this title, as such sections
were in effect on Nov. 4, 1990, see section 11813(c) of Pub. L. 101-508, set out as a note under section 29 of this title.
EFFECTIVE DATE OF 1984 AMENDMENTS
Amendment by Pub. L. 98-369 applicable to taxable years beginning after Dec. 31, 1983, and to carrybacks from
such years, see section 475(a)
of Pub. L. 98-369, set out as a note under section 21 of this title.
EFFECTIVE DATE OF 1981 AMENDMENTS
Amendment by Pub. L. 97-34 applicable to property placed in service after Dec. 31, 1980, in taxable years ending
after that date, see section 209(a) of Pub. L. 97-34, set out as an Effective Date note under section 168 of this title.
EFFECTIVE DATE OF 1978 AMENDMENTS
Amendment by section 404(c)(4) of Pub. L. 95-600 applicable to sales or exchanges after July 26, 1978, in taxable years ending after
such date, see section 404(d)(1) of Pub. L. 95-600, set out as a note under section 121 of this title.
Section 542(b) of Pub. L. 95-600 provided that: ‘The amendments made by subsection (a) (amending this section) shall
apply with respect to taxable years beginning after December 31, 1974.’
Amendment by section 703(j)(5) of Pub. L. 95-600 effective on Oct. 4, 1976, see section 703(r) of Pub. L. 95-600, set out as a note under section 46 of this title.
EFFECTIVE DATE OF 1976 AMENDMENTS
Amendment by section 1901(a)(128) of Pub. L. 94-455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of
Pub. L. 94-455, set out as a note under section 2 of this title.
Section 2127(b) of Pub. L. 94-455 provided that: ‘The amendment made by this section (amending this section) shall
apply to taxable years beginning after December 31, 1970.’
Section 2140(b) of Pub. L. 94-455, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘The amendment made by this section (amending this section) shall
apply with respect to any disposition of converted property (within the meaning of
section 1033(a)(2) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954)) after December 31, 1974, unless a condemnation proceeding with respect to such
property began before the date of the enactment of this Act (Oct. 4, 1976).'
EFFECTIVE DATE OF 1969 AMENDMENTS
Section 915(b) of Pub. L. 91-172, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘The amendment made by this section (amending this section) shall
apply only if the disposition of the converted property (within the meaning of section 1033(a)(2) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954)) occurs after the date of the enactment of this Act (Dec. 30, 1969).'
EFFECTIVE DATE OF 1964 AMENDMENTS
Amendment by Pub. L. 88-272 applicable to dispositions after Dec. 31, 1963, in taxable years ending after such
date, see section 206(c)
of Pub. L. 88-272, set out as an Effective Date note under section 121 of this title.
EFFECTIVE DATE OF 1958 AMENDMENTS
Amendment by Pub. L. 85-866 applicable to taxable years beginning after Dec. 31, 1953, and ending after Aug.
16, 1954, see section 1(c)(1)
of Pub. L. 85-866, set out as a note under section 165 of this title.
EFFECTIVE DATE OF 1956 AMENDMENTS
Section 5(b) of act June 29, 1956, provided that:
‘The amendment made by this section (amending this section) shall apply with respect
to taxable years ending after December 31, 1955, but only in the case of sales and
exchanges of livestock after December 31, 1955.’
TEMPORARY TAX RELIEF FOR KIOWA COUNTY, KANSAS AND SURROUNDING AREA
Section 15345(a)(10) of Pub. L. 110-246 provided that “the following provisions of or relating to the Internal Revenue Code
of 1986 shall apply to the Kansas disaster area in addition to the areas to which
such provisions otherwise apply:
“(10) Section 405 of the Katrina Emergency Tax Relief Act of 2005 (relating to extension
of replacement period for non-recognition of gain).”
EXTENSION OF REPLACEMENT PERIOD FOR NONRECOGNITION OF GAIN FOR PROPERTY LOCATED IN
HURRICANE KATRINA DISASTER AREA
Section 405 of Pub. L. 109-73, as amended by Pub. L. 110-246, Sec. 15345, provided that:
“Clause (i) of section 1033(a)(2)(B) of the Internal Revenue Code of 1986 shall be applied by substituting “5 years” for “2 years” with respect to
property in the Hurricane Katrina disaster area which is compulsorily or involuntarily
converted on or after May 4, 2007, by reason of Hurricane Katrina, but only if substantially
all of the use of the replacement property is in such area.”
SAVINGS PROVISION
For provisions that nothing in amendment by Pub. L. 101-508 be construed to affect treatment of certain transactions occurring, property acquired,
or items of income, loss, deduction, or credit taken into account prior to Nov. 5,
1990, for purposes of determining liability for tax for periods ending after Nov.
5, 1990, see section 11821(b) of Pub. L. 101-508, set out as a note under section 29 of this title.
