Internal Revenue Code:Sec. 1033. Involuntary conversions

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Contents


Location in Internal Revenue Code


     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle A - Income Taxes
       CHAPTER 1 - NORMAL TAXES AND SURTAXES
        Subchapter O - Gain or Loss on Disposition of Property
         PART III - COMMON NONTAXABLE EXCHANGES
       

Statute

    Sec. 1033. Involuntary conversions
 
    (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 -
      (1) Conversion into similar property
        Into property similar or related in service or use to the
      property so converted, no gain shall be recognized.
      (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:
        (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) 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
            (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.
        (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) 2 years after the close of the first taxable year in
          which any part of the gain upon the conversion is realized,
          or
            (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.
        (C) Time for assessment of deficiency attributable to gain upon
            conversion
          If a taxpayer has made the election provided in subparagraph
        (A), then -
            (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
            (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.
        (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.
        (E) Definitions
          For purposes of this paragraph -
          (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.
          (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.
    (b) Basis of property acquired through involuntary conversion
      (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 -
          (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
          (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.
      (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.
      (3) Property held by corporation the stock of which is
          replacement property
        (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.
        (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)).
        (C) Allocation of basis reduction
          The decrease required under subparagraph (A) shall be
        allocated -
            (i) first to property which is similar or related in
          service or use to the converted property,
            (ii) second to depreciable property (as defined in section
          1017(b)(3)(B)) not described in clause (i), and
            (iii) then to other property.
        (D) Special rules
          (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).
          (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).
    (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.
    (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.
    (e) Livestock sold on account of drought, flood, or other
     weather-related conditions.
       (1) 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.
       (2) Extension of replacement period.--
          (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'.
          (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.

    (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.
    (g) Condemnation of real property held for productive use in trade
        or business or for investment
      (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.
      (2) Limitations
        Paragraph (1) shall not apply to the purchase of stock in the
       acquisition of control of a corporation described in subsection
       (a)(2)(A).
      (3) Election to treat outdoor advertising displays as real
          property
        (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.
        (B) Election
          An election made under subparagraph (A) may not be revoked
        without the consent of the Secretary.
        (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.
        (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.
      (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''.
    (h) Special rules for property damaged by Presidentially declared
        disasters
      (1) 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 -
        (A) Treatment of insurance proceeds
          (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.
          (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) such proceeds shall be treated as received for the
            conversion of a single item of property, and
              (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.
        (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''.
      (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 compulsorily or involuntarily
      converted as a result of a Presidentially 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.
      (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.     
      (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) Replacement property must be acquired from unrelated person in
        certain cases
      (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).
      (2) Taxpayers to which subsection applies
        This subsection shall apply to -
          (A) a C corporation,
          (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
          (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.
      (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).
    (j) Sales or exchanges to implement microwave relocation policy
      (1) 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.

    (k) 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.
 
    (l) Cross references
          (1) For determination of the period for which the taxpayer
        has held property involuntarily converted, see section 1223.
          (2) For treatment of gains from involuntary conversions as
        capital gains in certain cases, see section 1231(a).
          (3) For exclusion from gross income of gain from involuntary
        conversion of principal residence, see section 121.
 

Sources

    (Aug. 16, 1954, ch. 736, 68A Stat. 303; June 29, 1956, ch. 464,
    Sec. 5(a), 70 Stat. 407; Pub. L. 85-866, title I, Sec. 45, 46(a),
    Sept. 2, 1958, 72 Stat. 1641; Pub. L. 88-272, title II, Sec.
    206(b)(3), Feb. 26, 1964, 78 Stat. 40; Pub. L. 91-172, title IX,
    Sec. 915(a), Dec. 30, 1969, 83 Stat. 723; Pub. L. 94-455, title
    XIX, Sec. 1901(a)(128), 1906(b)(13)(A), title XXI, Sec. 2127(a),
    2140(a), Oct. 4, 1976, 90 Stat. 1785, 1834, 1920, 1932; Pub. L.
    95-600, title IV, Sec. 404(c)(4), title V, Sec. 542(a), title VII,
    Sec. 703(j)(5), Nov. 6, 1978, 92 Stat. 2870, 2888, 2941; Pub. L.
    97-34, title II, Sec. 202(d)(2), Aug. 13, 1981, 95 Stat. 221; Pub.
    L. 98-369, div.  A, title IV, Sec. 474(r)(24), July 18, 1984, 98
    Stat. 844; Pub. L. 101-508, title XI, Sec. 11813(b)(20), Nov. 5,
    1990, 104 Stat. 1388-555; Pub. L. 103-66, title XIII, Sec.
    13431(a), Aug. 10, 1993, 107 Stat. 567; Pub. L. 104-7, Sec.
    3(a)(1), (b)(1), Apr. 11, 1995, 109 Stat. 94, 95; Pub. L. 104-188,
    title I, Sec. 1119(a), (b), 1610(a), Aug. 20, 1996, 110 Stat. 1765,
    1844; Pub. L. 105-34, title III, Sec. 312(d)(1), (7), title IX,
    Sec. 913(b), title X, Sec. 1087(a), Aug. 5, 1997, 111 Stat. 839,
    840, 878, 959.)
 

References in Text

                             REFERENCES IN TEXT
      The Disaster Relief and Emergency Assistance Act, referred to in
    subsec. (h)(3), is Pub. L. 93-288, May 22, 1974, 88 Stat. 143, as
    amended, known as the Robert T. Stafford Disaster Relief and
    Emergency Assistance Act, which is classified principally to
    chapter 68 (Sec. 5121 et seq.) of Title 42, The Public Health and
    Welfare. For complete classification of this Act to the Code, see
    Short Title note set out under section 5121 of Title 42 and Tables.
 

Miscellaneous

                                 AMENDMENTS
    2005 - P.L. 109-73
SEC. 405
    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 August 25, 2005, by 
reason of Hurricane Katrina, but only if substantially all of the use of 
the replacement property is in such area.

    2005 - Pub. L. 109-7(b). Section 1033 of such Code (relating to
    involuntary conversions) is amended by redesignating subsection (k)
    as subsection (l) and by inserting after subsection (j) the following
    new subsection:
    "(k) Sales or Exchanges Under Certain Hazard Mitigation Programs...".
    Effective Date.--<<NOTE: 26 USC 1033 note.>> Dispositions of property 
    under hazard mitigation programs.--The amendments made by subsection (b)
    shall apply to sales or other dispositions before, on, or after the
    date of the enactment of this Act.  Act approved April 15, 2005.

     2004 - Pub. L. 108-357, Sec. 311(a).  Subsection (f) of
     section 1033 (relating to involuntary conversions) is amended--
     by inserting ``drought, flood, or other weather-related 
      conditions, or'' after ``because of'',
     by inserting ``in the case of soil contamination or 
      other environmental contamination'' after ``including real 
      property'', and
     by striking ``Where There Has Been Environmental Contamination''
      in the heading and inserting ``in Certain Cases''.

     2004 - Pub. L. 108-357, Sec. 311(b).  Subsection (e) of section 1033 
     (relating to involuntary conversions) is amended--
      by striking ``Conditions.--For purposes'' and inserting ``Conditions.--
       ``(1) In general.--For purposes'', and
      by adding at the end the new paragraph (2) Extension of replacement period.

                      EFFECTIVE DATE OF 2004 AMENDMENT
     Pub. L. 108-357
     Effective Date.--The amendments made by section 311(a)&(b) shall apply
     to any taxable year with respect to which the due date (without regard
     to extensions) for the return is after December 31, 2002.

      1997 - Subsec. (e). Pub. L. 105-34, Sec. 913(b), inserted '',
    flood, or other weather-related conditions'' after ''drought'' in
    heading and '', flood, or other weather-related conditions'' before
    period at end of text.
      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 heading and
    text of subsec. (i) generally.  Prior to amendment, text read as
    follows:
      ''(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 par. (3)
    generally.  Prior to amendment, par. (3) read as follows: ''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), reenacted
    heading without change and amended text generally.  Prior to
    amendment, text read as follows: ''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) 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 heading.
      Subsec. (h)(1). Pub. L. 104-188, Sec. 1119(b)(3), substituted
    ''Principal residences'' for ''In general'' in heading.
      Subsec. (h)(2). Pub. L. 104-188, Sec. 1119(a), added par. (2).
    Former par. (2) redesignated (3).
      Subsec. (h)(3). Pub. L. 104-188, Sec. 1119(a), (b)(1),
    redesignated par. (2) as (3) and substituted ''property'' for
    ''residence'' before ''is located''.  Former par. (3) redesignated
    (4).
      Subsec. (h)(4). Pub. L. 104-188, Sec. 1119(a), redesignated par.
    (3) as (4).
      1995 - Subsec. (i). Pub. L. 104-7, Sec. 3(a)(1), added subsec.
    (i). Former subsec. (i) redesignated (j).
      Subsec. (j). Pub. L. 104-7, Sec. 3(b)(1), added subsec. (j).
    Former subsec. (j) redesignated (k).
      Pub. L. 104-7, Sec. 3(a)(1), redesignated subsec. (i) as (j).
      Subsec. (k). Pub. L. 104-7, Sec. 3(b)(1), redesignated subsec.
    (j) as (k).
      1993 - Subsecs. (h), (i). Pub. L. 103-66 added subsec. (h) and
    redesignated former subsec. (h) as (i).
      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 1997 AMENDMENT
      Amendment by section 312(d)(1), (7) of Pub. L. 105-34 applicable
    to sales and exchanges after May 6, 1997, with certain exceptions,
    see section 312(d) of Pub. L. 105-34, set out as a note under
    section 121 of this title.
      Amendment by section 913(b) of Pub. L. 105-34 applicable to sales
    and exchanges after Dec. 31, 1996, see section 913(c) of Pub. L.
    105-34, set out as a note under section 451 of this title.
      Section 1087(b) of Pub. L. 105-34 provided that: ''The amendment
    made by this section (amending this section) shall apply to
    involuntary conversions occurring after June 8, 1997.''
                      EFFECTIVE DATE OF 1996 AMENDMENT
      Section 1119(d)(1) of Pub. L. 104-188 provided that: ''The
    amendments made by this section (amending this section) shall apply
    to disasters declared after December 31, 1994, in taxable years
    ending after such date.''
      Section 1610(b) of Pub. L. 104-188 provided that: ''The amendment
    made by this section (amending this section) shall apply to
    involuntary conversions occurring after the date of the enactment
    of this Act (Aug. 20, 1996).''
                      EFFECTIVE DATE OF 1995 AMENDMENT
      Section 3(a)(2) of Pub. L. 104-7 provided that: ''The amendment
    made by paragraph (1) (amending this section) shall apply to
    involuntary conversions occurring on or after February 6, 1995.''
      Section 3(b)(2) of Pub. L. 104-7 provided that: ''The amendment
    made by paragraph (1) (amending this section) shall apply to sales
    or exchanges after March 14, 1995.''
                      EFFECTIVE DATE OF 1993 AMENDMENT
      Section 13431(b) of Pub. L. 103-66 provided that: ''The amendment
    made by subsection (a) (amending this section) shall apply to
    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 AMENDMENT
      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 AMENDMENT
      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 AMENDMENT
      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 AMENDMENT
      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 AMENDMENT
      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 AMENDMENT
      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 AMENDMENT
      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 AMENDMENT
      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 AMENDMENT
      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.''
                             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.
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in sections 121, 139, 143, 165, 172,
    197, 381, 453, 857, 1016, 1031, 1223, 1245, 1250, 1351, 2032A,
    2057, 6212, 6504, 7508A of this title; title 25 sections 1716,
    1729, 1754; title 29 sections 1148, 1302.
 

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