§1045 — Title 26 Internal Revenue Code | U.S. Code

Summary

If you (not a corporation) sell qualified small business stock you owned for more than 6 months and choose to use this rule, you only have to report gain if what you got from the sale is more than the cost of any qualified small business stock you buy during the 60-day period that starts on the sale date. If part of that cost was already used under this rule, subtract it first. Qualified small business stock — means what section 1202(c) defines. If gain is not reported, it reduces the basis of the new stock in the order you bought it. The holding periods for the sold and replacement stock ignore section 1223, and only the first 6 months of the replacement stock’s holding period count for applying section 1202(c)(2). Rules like subsections (f)–(k) of section 1202 also apply.

Title 26, §1045

Internal Revenue Code — Source: USLM XML via OLRC

(a)In the case of any sale of qualified small business stock held by a taxpayer other than a corporation for more than 6 months 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 small business stock 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)For purposes of this section—

(1)The term “qualified small business stock” has the meaning given such term by section 1202(c).

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

(3)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 small business stock which is purchased by the taxpayer during the 60-day period described in subsection (a).

(4)For purposes of determining whether the nonrecognition of gain under subsection (a) applies to stock which is sold—

(A)the taxpayer’s holding period for such stock and the stock referred to in subsection (a)(1) shall be determined without regard to section 1223, and

(B)only the first 6 months of the taxpayer’s holding period for the stock referred to in subsection (a)(1) shall be taken into account for purposes of applying section 1202(c)(2).

(5)Rules similar to the rules of subsections (f), (g), (h), (i), (j), and (k) of section 1202 shall apply.

Notes & Related Subsidiaries

Editorial Notes

Amendments

1998—Subsec. (a). Pub. L. 105–206, § 6005(f)(1), in introductory provisions, substituted “a taxpayer other than a corporation” for “an individual” and “such taxpayer” for “such individual”. Subsec. (b)(5). Pub. L. 105–206, § 6005(f)(2), added par. (5).

Statutory Notes and Related Subsidiaries

Effective Date

of 1998 AmendmentAmendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

Effective Date

Section applicable to sales after Aug. 5, 1997, see section 313(c) of Pub. L. 105–34, set out as an

Effective Date

of 1997 Amendment note under section 1016 of this title.

§1045 Rollover of gain from qualified small business stock to another qualified small business stock

Summary

Title 26, §1045

Notes & Related Subsidiaries

Editorial Notes

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Effective Date

Citations & Metadata