§ 1397B. Nonrecognition of gain on rollover of empowerment zone investments

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

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

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

(b)Definitions and special rules For purposes of this section—

(1)Qualified empowerment zone asset

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

(i)references to empowerment zones were substituted for references to renewal communities,

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

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

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

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

(2)Certain gain not eligible for rollover This section shall not apply to—

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

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

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

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

(5)Holding period For purposes of determining whether the nonrecognition of gain under subsection

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

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

(Added Pub. L. 106–554, § 1(a)(7) [title I, § 116(a)(3)], Dec. 21, 2000, 114 Stat. 2763, 2763A–602; amended Pub. L. 113–295, div. A, title II, § 206(c), Dec. 19, 2014, 128 Stat. 4027; Pub. L. 115–141, div. U, title IV, § 401(d)(4)(B)(vii), (5)(B)(iv), (v), Mar. 23, 2018, 132 Stat. 1209, 1210; Pub. L. 116–260, div. EE, title I, § 118(c), Dec. 27, 2020, 134 Stat. 3051.)

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