Bloomberg Bloomberg
Comprehensive Tax Research. Practitioner to Practitioner. ®

Internal Revenue Code, § 1223. Holding Period Of Property

For purposes of this subtitle—
I.R.C. § 1223(1)
In determining the period for which the taxpayer has held property received in an exchange, there shall be included the period for which he held the property exchanged if, under this chapter, the property has, for the purpose of determining gain or loss from a sale or exchange, the same basis in whole or in part in his hands as the property exchanged, and, in the case of such exchanges the property exchanged at the time of such exchange was a capital asset as defined in section 1221 or property described in section 1231. For purposes of this paragraph—
I.R.C. § 1223(1)(A)
an involuntary conversion described in section 1033 shall be considered an exchange of the property converted for the property acquired, and
I.R.C. § 1223(1)(B)
a distribution to which section 355 (or so much of section 356 as relates to section 355) applies shall be treated as an exchange.
I.R.C. § 1223(2)
In determining the period for which the taxpayer has held property however acquired there shall be included the period for which such property was held by any other person, if under this chapter such property has, for the purpose of determining gain or loss from a sale or exchange, the same basis in whole or in part in his hands as it would have in the hands of such other person.
I.R.C. § 1223(3)
In determining the period for which the taxpayer has held stock or securities the acquisition of which (or the contract or option to acquire which) resulted in the nondeductibility (under section 1091 relating to wash sales) of the loss from the sale or other disposition of substantially identical stock or securities, there shall be included the period for which he held the stock or securities the loss from the sale or other disposition of which was not deductible.
I.R.C. § 1223(4)
In determining the period for which the taxpayer has held stock or rights to acquire stock received on a distribution, if the basis of such stock or rights is determined under section 307, there shall (under regulations prescribed by the Secretary) be included the period for which he held the stock in the distributing corporation before the receipt of such stock or rights upon such distribution.
I.R.C. § 1223(5)
In determining the period for which the taxpayer has held stock or securities acquired from a corporation by the exercise of rights to acquire such stock or securities, there shall be included only the period beginning with the date on which the right to acquire was exercised.
I.R.C. § 1223(6)
[Repealed. Pub. L. 113-295, Div. A, Sec. 221(a)(80)(C).]
I.R.C. § 1223(7)
In determining the period for which the taxpayer has held a commodity acquired in satisfaction of a commodity futures contract (other than a commodity futures contract to which section 1256 applies) there shall be included the period for which he held the commodity futures contract if such commodity futures contract was a capital asset in his hands.
I.R.C. § 1223(8)
[Repealed. Pub. L. 113-295, Div. A, Sec. 221(a)(80)(C).]
I.R.C. § 1223(9)
In the case of a person acquiring property from a decedent or to whom property passed from a decedent (within the meaning of section 1014(b)), if—
I.R.C. § 1223(9)(A)
the basis of such property in the hands of such person is determined under section 1014, and
I.R.C. § 1223(9)(B)
such property is sold or otherwise disposed of by such person within 1 year after the decedent's death,
then such person shall be considered to have held such property for more than 1 year.
I.R.C. § 1223(10)
If—
I.R.C. § 1223(10)(A)
property is acquired by any person in a transfer to which section 1040 applies,
I.R.C. § 1223(10)(B)
such property is sold or otherwise disposed of by such person within 1 year after the decedent's death, and
I.R.C. § 1223(10)(C)
such sale or disposition is to a person who is a qualified heir (as defined in section 2032A(e)(1)) with respect to the decedent, then the person making such sale or other disposition shall be considered to have held such property for more than 1 year.
I.R.C. § 1223(11)
In determining the period for which the taxpayer has held qualified replacement property (within the meaning of section 1042(b)) the acquisition of which resulted under section 1042 in the nonrecognition of any part of the gain realized on the sale of qualified securities (within the meaning of section 1042(b)), there shall be included the period for which such qualified securities had been held by the taxpayer.
I.R.C. § 1223(12)
In determining the period for which the taxpayer has held property the acquisition of which resulted under section 1043 in the nonrecognition of any part of the gain realized on the sale of other property, there shall be included the period for which such other property had been held as of the date of such sale.
I.R.C. § 1223(13)
Except for purposes of subsections (a)(2) and (c)(2)(A) of section 1202, in determining the period for which the taxpayer has held property the acquisition of which resulted under section 1045 or 1397B in the nonrecognition of any part of the gain realized on the sale of other property, there shall be included the period for which such other property has been held as of the date of such sale.
I.R.C. § 1223(14)
If the security to which a securities futures contract (as defined in section 1234B) relates (other than a contract to which section 1256 applies) is acquired in satisfaction of such contract, in determining the period for which the taxpayer has held such security, there shall be included the period for which the taxpayer held such contract if such contract was a capital asset in the hands of the taxpayer.
I.R.C. § 1223(15) Cross Reference
For special holding period provision relating to certain partnership distributions, see section 735(b).
(Aug. 16, 1954, ch. 736, 68A Stat. 323; Oct. 16, 1962, Pub. L. 87-834, 14(b)(3), 76 Stat. 1041; Dec. 31, 1970, Pub. L. 91-614, title I, 101(g), 84 Stat. 1838; Oct. 4, 1976, Pub. L. 94-455, title XIV, 1402(b)(1)(Q), (2), title XIX, 1906(b) (13)(A), 90 Stat. 1732, 1834; Nov. 6, 1978, Pub. L. 95-600, title VII, 702(c)(5), 92 Stat. 2927; Apr. 2, 1980, Pub. L. 96-223, title IV, 401(a), 94 Stat. 299; Jan. 12, 1983, Pub. L. 97-448, title I, 104(b)(3)(C), 105(c)(4), 96 Stat. 2382, 2385; July 18, 1984, Pub. L. 98-369, div. A, title I, 54(c), title V, 541(b)(1), title X, 1001(b)(14), 98 Stat. 569, 890, 1011; Nov. 10, 1988, Pub. L. 100-647, title I, 1006(e)(17), 102 Stat. 3403; Pub. L. 105-34, title III, Sec. 312(d)(9), 313(b)(2), Aug. 5, 1997, 111 Stat 788; Pub. L. 105-206, title V, Sec. 5001(a), title VI, Sec. 6005, July 22, 1998, 112 Stat. 685; Pub. L. 106-554, Sec. 116, 401, Dec. 21, 2000, 114 Stat. 2763; Pub. L. 108-357, title IV, Sec. 413(c)(21), Oct. 22, 2004, 118 Stat. 1418; Pub. L. 109-135, title IV, Sec. 402(a)(2), Dec. 21, 2005, 119 Stat. 2577; Pub. L. 113-295, Div. A, Sec. 221(a)(80), Dec. 19, 2014, 128 Stat. 4010; Pub. L. 115-141, Div. U, title IV, Sec. 401(d)(4)(B)(vi), Mar. 23, 2018, 132 Stat. 348.)
BACKGROUND NOTES
AMENDMENTS
2018 — Par. (13). Pub. L. 115-141, Div. U, Sec. 401(d)(4)(B)(vi), amended par. (13) by substituting “subsections (a)(2) and (c)(2)(A) of section 1202” for “sections 1202(a)(2), 1202(c)(2)(A), 1400B(b), and 1400F(b)”.
2014 — Par. (1). Pub. L. 113-295, Div. A, Sec. 221(a)(80)(A), amended par. (1) by striking “after March 1, 1954,”.
Par. (4). Pub. L. 113-295, Div. A, Sec. 221(a)(80)(B), amended par. (4) by striking “(or under so much of section 1052(c) as refers to section 113(a)(23) of the Internal Revenue Code of 1939)”.
Par. (6). Pub. L. 113-295, Div. A, Sec. 221(a)(80)(C), struck par. (6). Before being struck, it read as follows:
“(6) In determining the period for which the taxpayer has held a residence, the acquisition of which resulted under section 1034 (as in effect on the day before the date of the enactment of the Taxpayer Relief Act of 1997) in the nonrecognition of any part of the gain realized on the sale or exchange of another residence, there shall be included the period for which such other residence had been held as of the date of such sale or exchange. For purposes of this paragraph, the term “sale or exchange” includes an involuntary conversion occurring after December 31, 1950, and before January 1, 1954.”
Par. (8). Pub. L. 113-295, Div. A, Sec. 221(a)(80)(C), struck par. (8). Before being struck, it read as follows:
“(8) Any reference in this section to a provision of this title shall, where applicable, be deemed a reference to the corresponding provision of the Internal Revenue Code of 1939, or prior internal revenue laws.”
2005 — Par. (3)-(16). Pub. L. 109-135, Sec. 402(a)(2), struck par. (3) and redesignated par. (4)-(16) redes. as par. (3)-(15), respectively. Before being struck par. (3) read as follows:
“(3) In determining the period for which the taxpayer has held stock or securities received upon a distribution where no gain was recognized to the distributee under section 1081(c) (or under section 112(g) of the Revenue Act of 1928, 45 Stat. 818, or the Revenue Act of 1932, 48 Stat. 705), there shall be included the period for which he held the stock or securities in the distributing corporation before the receipt of the stock or securities on such distribution.”
2004 - Par. (10)-(17). Pub. L. 108-357, Sec. 413(c)(21), struck par. (10) and redesignated par. (11)-(17) as par. (10)-(16), respectively. Before being struck, par. (10) read as follows:
“(10) In determining the period for which the taxpayer has held trust certificates of a trust to which subsection (d) of section 1246 applies, or the period for which the taxpayer has held stock in a corporation to which subsection (d) of section 1246 applies, there shall be included the period for which the trust or corporation (as the case may be) held the stock of foreign investment companies.”
2000--Par. (15). Pub. L. 106-554, Sec. 116(b)(2), amended par. (15). Before amendment it read as follows:
“(15) In determining the period for which the taxpayer has held property the acquisition of which resulted under section 1045 in the nonrecognition of any part of the gain realized on the sale of other property, there shall be included the period for which such other property has been held as of the date of such sale.”
Par. (16)-(17). Pub. L. 106-554, Sec. 401(h)(1), redesignated par. (16) as par. (17) and added new par. (16).
1998--Par. (11). Pub. L. 105-206, Sec. 6005(d)(4), amended par. (11) by substituting “18 months” for “1 year”.
Par. (11). Pub. L. 105-206, Sec. 5001(a)(5), amended par. (11) by substituting “1 year” for “18 months”.
Par. (12). Pub. L. 105-206, Sec. 6005(d)(4), amended par. (12) by substituting “18 months” for “1 year”.
Par. (12). Pub. L. 105-206, Sec. 5001(a)(5), amended par. (12) by substituting “1 year” for “18 months”.
1997--Par. (7). Pub. L. 105-34, Sec. 312(d)(9) inserted “(as in effect on the day before the date of the enactment of the Taxpayer Relief Act of 1997)” after “1034”.
Par. (15), (16). Pub. L. 105-34, Sec. 313(b)(2) redesignated paragraph (15) as paragraph (16) and inserted a new paragraph (15).
1988--Par. (14). Pub. L. 100-647 amended par. (14) generally, substituting “reference” for “references” in heading, striking out “(A)” before “For special holding”, and striking out subpar. (B) which related to distributions of appreciated property to corporations.
1984--Pars. (11), (12). Pub. L. 98-369, 1001(b)(14), substituted “6 months” for “1 year”.
Par. (13). Pub. L. 98-369, 541(b)(1), added par. (13). Former par. (13) redesignated (14).
Par. (14). Pub. L. 98-369, 541(b)(1), redesignated former par. (13) as (14).
Pub. L. 98-369, 54(c), designated existing cross reference as subpar. (A) and added subpar. (B).
1983--Par. (8). Pub. L. 97-448, 105(c)(4), inserted “(other than a commodity futures contract to which section 1256 applies)" after “acquired in satisfaction of a commodity futures contract”.
Pars. (12), (13). Pub. L. 97-448, 104(b)(3)(C), added par. (12) and redesignated former par. (12) as (13).
1980--Par. (11)(A). Pub. L. 96-223 repealed the amendment made by Pub. L. 95-600. See 1978 Amendment note below.
1978--Par. (11)(A). Pub. L. 95-600 inserted reference to determination of basis of property under section 1023. See Repeals note below.
1976--Par. (5). Pub. L. 94-455, 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
Par. (11). Pub. L. 94-455, 1402(b)(2), provided that “9 months” would be changed to “1 year”.
Pub. L. 94-455, 1402(b)(1)(Q), provided that “6 months” would be changed to “9 months" for taxable years beginning in 1977.
1970--Pars. (11), (12). Pub. L. 91-614 added par. (11) and redesignated former par. (11) as (12).
1962--Pars. (10), (11). Pub. L. 87-834 added par. (10) and redesignated former par. (10) as (11).
EFFECTIVE DATE OF 2018 AMENDMENT
Amendment by Pub. L. 115-141, Div. U, Sec. 401(d)(4)(B)(vi), effective March 23, 2018.
Sec. 401(d)(4)(C) of Pub. L. 115-141, Div. U, provided the following Savings Provision:
“(C) Savings Provision.—The amendments made by this paragraph shall not apply to—
“(i) in the case of the repeal of section 1400A of the Internal Revenue Code of 1986, obligations described in section 1394 of such Code (as in effect before its repeal) which were issued before January 1, 2012,
“(ii) in the case of the repeal of section 1400B of such Code, DC Zone assets (as defined in such section, as in effect before its repeal) which were acquired by the taxpayer before January 1, 2012, and
“(iii) in the case of the repeal of section 1400C of such Code, principal residences acquired before January 1, 2012.
EFFECTIVE DATE OF 2014 AMENDMENTS
Amendments by Pub. L. 113-296, Div. A, Sec. 221(a)(80), 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 2005 AMENDMENTS
Amendments by Section 402(a)(2) of Pub. L. 109-135 effective as if included in the provisions of the Energy Policy Act of 2005 [Pub. L. 109-58, Sec. 1263], except with respect to any transaction ordered in compliance with the Public Utility Holding Company Act of 1935 before its repeal.
EFFECTIVE DATE OF 2004 AMENDMENTS
Amendments by Section 413(c)(21) of Pub. L. 108-357 effective for taxable years of foreign corporations beginning after December 31, 2004, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end.
EFFECTIVE DATE OF 2000 AMENDMENTS
Amendment by Section 116(b)(2) of Pub. L. 106-554 effective qualified empowerment zone assets acquired after the date of the enactment of this Act [Enactment Date: Dec. 21, 2000].
Amendments by Section 401(h)(1) of Pub. L. 106-554 effective on the date of the enactment of this Act.
EFFECTIVE DATE OF 1998 AMENDMENTS
Amendments by Section 6005(d)(4) of Pub. L. 105-206 effective as if included in the provisions of the Taxpayer Relief Act of 1997 to which they relate [Effective Date of Pub. L. 105-34, Sec. 311: taxable years ending after May 6, 1997, but see election set forth in section 1].
Amendments by Section 5001(a)(5) of Pub. L. 105-206 effective January 1, 1998.
EFFECTIVE DATE OF 1997 AMENDMENTS
Amendment by Section 312(d)(9) of Pub. L. 105-34 applicable to sales and exchanges after May 6, 1997. Special rules provided for by section 312(d)[e] of Pub. L. 105-34 are set out in Section 121.
Amendment by Section 313(b)(2), of Pub. L. 105-34 applicable to sales after the date of enactment of such Act [enacted: Aug. 5, 1997].
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment relates, see section 1019(a) of Pub. L. 100-647, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1984 AMENDMENTS
Amendment by section 541(b)(1) of Pub. L. 98-369 applicable to sales of securities in taxable years beginning after July 18, 1984, see section 541(c) of Pub. L. 98-369, set out as an Effective Date note under section 1042 of this title.
Amendment by section 1001(b)(14) of Pub. L. 98-369 applicable to property acquired after June 22, 1984, and before Jan. 1, 1988, see section 1001(e) of Pub. L. 98-369, set out as a note under section 166 of this title.
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 97-448 effective, except as otherwise provided, as if it had been included in the provision of the Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such amendment relates, see section 109 of Pub. L. 97-448, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1980 AMENDMENT AND REVIVAL OF PRIOR LAW
Amendment by Pub. L. 96-223 (repealing section 702(c)(5) of Pub. L. 95-600 and the amendments made thereby, which had amended this section) applicable in respect of decedents dying after Dec. 31, 1976, and except for certain elections, this title to be applied and administered as if those repealed provisions had not been enacted, see section 401(b), (e) of Pub. L. 96-223, set out as a note under section 1023 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Amendment by Pub. L. 95-600 to take effect as if included in the amendments and additions made by, and the appropriate provisions of Pub. L. 94-455, see section 702(c)(10) of Pub. L. 95-600, set out as a note under section 1014 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
Section 1402(b)(1) of Pub. L. 94-455 provided that the amendment made by section 1402(b)(1)(Q) of Pub. L. 94-455 is effective with respect to taxable years beginning in 1977.
Section 1402(b)(2) of Pub. L. 94-455 provided that the amendment made by section 1402(b)(2) of Pub. L. 94-455 is effective with respect to taxable years beginning after Dec. 31, 1977.
EFFECTIVE DATE OF 1970 AMENDMENT
Amendment by Pub. L. 91-614 applicable with respect to decedents dying after Dec. 31, 1970, see section 101(j) of Pub. L. 91-614, set out as a note under section 2032 of this title.
EFFECTIVE DATE OF 1962 AMENDMENT
Amendment by Pub. L. 87-834 applicable with respect to taxable years beginning after Dec. 31, 1962, see section 14(c) of Pub. L. 87-834, set out as an Effective Date note under section 1246 of this title.
REPEALS
Pub. L. 95-600, 702(c)(5), cited as a credit to this section, and the amendments made thereby, were repealed by Pub. L. 96-223, title IV, 401(a), 94 Stat. 299, resulting in the text of this section reading as it read prior to enactment of section 702(c)(5). See Effective Date of 1980 Amendment and Revival of Prior Law note set out above.