republic-os/legal/us/code/title-26/chapter-1/section-1037.md

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LegalText	26 U.S.C. § 1037	Certain exchanges of United States obligations	us	united_states_code	code_section	26	INTERNAL REVENUE CODE	1	NORMAL TAXES AND SURTAXES	1037	26 U.S.C. § 1037	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/s1037	data/legal/raw/us/code/title-26/usc26.xml	8cecabb30c93c4170dc92f143b5cb100e387bfade2b87aa58d1001805fde4dd6	a261f094809116f42a96648a3d5eee80fa010379d67412551c21dd5c900b27f4	ab0e1904ba446533f579c1a7150b23ebc3512de12157dca74a22c949469b71a9	2026-07-04	official	legal us-code

26 U.S.C. § 1037 - Certain exchanges of United States obligations

Text

(a) General rule When so provided by regulations promulgated by the Secretary in connection with the issue of obligations of the United States, no gain or loss shall be recognized on the surrender to the United States of obligations of the United States issued under chapter 31 of title 31 in exchange solely for other obligations issued under such chapter.

(b) Application of original issue discount rules (1) Exchanges involving obligations issued at a discount In any case in which gain has been realized but not recognized because of the provisions of subsection (a) (or so much of section 1031(b) as relates to subsection (a) of this section), to the extent such gain is later recognized by reason of a disposition or redemption of an obligation received in an exchange subject to such provisions, the first sentence of section 1271(c)(2) 11 See References in Text note below. shall apply to such gain as though the obligation disposed of or redeemed were the obligation surrendered to the Government in the exchange rather than the obligation actually disposed of or redeemed. For purposes of this paragraph and subpart A of part V of subchapter P, if the obligation surrendered in the exchange is a nontransferable obligation described in subsection (a) or (c) of section 454—

(A) the aggregate amount considered, with respect to the obligation surrendered, as ordinary income shall not exceed the difference between the issue price and the stated redemption price which applies at the time of the exchange, and

(B) the issue price of the obligation received in the exchange shall be considered to be the stated redemption price of the obligation surrendered in the exchange, increased by the amount of other consideration (if any) paid to the United States as a part of the exchange.

(2) Exchanges of transferable obligations issued at not less than par In any case in which subsection (a) (or so much of section 1031(b) or (c) as relates to subsection (a) of this section) has applied to the exchange of a transferable obligation which was issued at not less than par for another transferable obligation, the issue price of the obligation received from the Government in the exchange shall be considered for purposes of applying subpart A of part V of subchapter P to be the same as the issue price of the obligation surrendered to the Government in the exchange, increased by the amount of other consideration (if any) paid to the United States as a part of the exchange.

(c) Cross references (1) For rules relating to the recognition of gain or loss in a case where subsection (a) would apply except for the fact that the exchange was not made solely for other obligations of the United States, see subsections (b) and (c) of section 1031.

(2) For rules relating to the basis of obligations of the United States acquired in an exchange for other obligations described in subsection (a), see subsection (d) of section 1031.

(Added Pub. L. 86–346, title II, § 201(a), Sept. 22, 1959, 73 Stat. 622; amended Pub. L. 94–455, title XIX, § 1901(a)(130), (b)(3)(I), Oct. 4, 1976, 90 Stat. 1786, 1793; Pub. L. 97–452, § 2(c)(3), Jan. 12, 1983, 96 Stat. 2478; Pub. L. 98–369, div. A, title I, § 42(a)(11), July 18, 1984, 98 Stat. 557.)

Notes

Editorial Notes

References in TextSection 1271(c), referred to in subsec. (b)(1), was repealed and section 1271(d) redesignated section 1271(c) by Pub. L. 115–141, div. U, title IV, § 401(c)(1)(A)(i), Mar. 23, 2018, 132 Stat. 1205.

Amendments1984—Subsec. (b). Pub. L. 98–369, § 42(a)(11)(C), substituted “original issue discount rules” for “section 1232” in heading. Subsec. (b)(1). Pub. L. 98–369, § 42(a)(11)(A), (B), substituted “section 1271(c)(2)” for “section 1232(a)(2)(B)”, and “subpart A of part V of subchapter P” for “section 1232”. Subsec. (b)(2). Pub. L. 98–369, § 42(a)(11)(B), substituted “subpart A of part V of subchapter P” for “section 1232”. 1983—Subsec. (a). Pub. L. 97–452 substituted “chapter 31 of title 31” and “chapter” for “the Second Liberty Bond Act” and “Act”, respectively. 1976—Subsec. (b)(1). Pub. L. 94–455 substituted in introductory provisions “section 1232(a)(2)(B)” for “section 1232(a)(2)(A)” and in subpar. (A) “ordinary income” for “gain from the sale or exchange of property which is not a capital asset”.

Statutory Notes and Related Subsidiaries

Effective Date of 1984 AmendmentAmendment by Pub. L. 98–369 applicable to taxable years ending after July 18, 1984, see section 44 of Pub. L. 98–369, set out as an Effective Date note under section 1271 of this title.

Effective Date of 1976 AmendmentAmendment by 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.

Effective DatePub. L. 86–346, title II, § 203, Sept. 22, 1959, 73 Stat. 624, provided that: “The amendments made by this title [enacting this section and amending section 1031 of this title and section 742a of former Title 31, Money and Finance] shall be effective for taxable years ending after the date of enactment of this Act [Sept. 22, 1959].”