republic-os/legal/us/code/title-26/chapter-1/section-1397b.md

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type	title	description	jurisdiction	corpus	kind	title_number	title_name	chapter_number	chapter_name	section	citation	status	release_point	release_date	source	source_url	source_identifier	source_file	source_hash	raw_snapshot_hash	text_hash	retrieved_at	confidence	tags
LegalText	26 U.S.C. § 1397B	Nonrecognition of gain on rollover of empowerment zone investments	us	united_states_code	code_section	26	INTERNAL REVENUE CODE	1	NORMAL TAXES AND SURTAXES	1397B	26 U.S.C. § 1397B	current	119-100	2026-06-26	official	https://uscode.house.gov/download/releasepoints/us/pl/119/100/xml_usc26@119-100.zip	/us/usc/t26/s1397B	data/legal/raw/us/code/title-26/usc26.xml	e32a91f4f0c99a715b0ebf8b4da2eb0344d9f7fd8f3932d2593d755323fa27c8	a261f094809116f42a96648a3d5eee80fa010379d67412551c21dd5c900b27f4	f5c0d64bee520fff4dbdf7f7d4d9ea5862e3bec9de58446556396a24eda2c0cb	2026-07-04	official	legal us-code

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

Text

(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) 11 See References in Text note below. 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.)

Notes

Editorial Notes

References in TextThe date of the enactment of this paragraph, referred to in subsec. (b)(1)(A)(iii), is the date of enactment of Pub. L. 106–554, which was approved Dec. 21, 2000. Section 1400F, referred to in subsec. (b)(1), was repealed by Pub. L. 115–141, div. U, title IV, § 401(d)(5)(A), Mar. 23, 2018, 132 Stat. 1210.

Prior ProvisionsA prior section 1397B was renumbered section 1397C of this title.

Amendments2020—Subsec. (c). Pub. L. 116–260 added subsec. (c). 2018—Subsec. (b)(1)(B). Pub. L. 115–141, § 401(d)(5)(B)(iv), added subpar. (B). Pub. L. 115–141, § 401(d)(4)(B)(vii), struck out subpar. (B). Text read as follows: “The District of Columbia Enterprise Zone shall not be treated as an empowerment zone for purposes of this section.” Subsec. (b)(5). Pub. L. 115–141, § 401(d)(5)(B)(v), substituted “which is sold, the taxpayer’s holding period for such asset and the asset referred to in subsection (a)(1) shall be determined without regard to section 1223.” for “which is sold— “(A) the taxpayer’s holding period for such asset and the asset referred to in subsection (a)(1) shall be determined without regard to section 1223, and “(B) only the first year of the taxpayer’s holding period for the asset referred to in subsection (a)(1) shall be taken into account for purposes of paragraphs (2)(A)(iii), (3)(C), and (4)(A)(iii) of section 1400F(b).” 2014—Subsec. (b)(1)(A)(iv). Pub. L. 113–295 added cl. (iv).

Statutory Notes and Related Subsidiaries

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

Effective Date of 2014 AmendmentAmendment by Pub. L. 113–295 effective as if included in the provisions of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Pub. L. 111–312, to which such amendment relates, see section 206(d) of Pub. L. 113–295, set out as a note under section 32 of this title.

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

Savings ProvisionAmendment by section 401(d)(4)(B)(vii) of Pub. L. 115–141 not applicable to certain obligations issued, DC Zone assets acquired, or principal residences acquired before Jan. 1, 2012, see section 401(d)(4)(C) of Pub. L. 115–141, set out as a note under former section 1400 of this title. Amendment by section 401(d)(5)(B)(iv), (v) of Pub. L. 115–141 not applicable to certain qualified community assets acquired, wages paid or incurred, qualified revitalization buildings placed in service, or property acquired before Jan. 1, 2010, see section 401(d)(5)(C) of Pub. L. 115–141, set out as a note under former section 1400E of this title. For provisions that nothing in amendment by Pub. L. 115–141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Mar. 23, 2018, for purposes of determining liability for tax for periods ending after Mar. 23, 2018, see section 401(e) of Pub. L. 115–141, set out as a note under section 23 of this title.