Title 26 — Internal Revenue CodeRelease 119-73not60

§1019 Property on Which Lessee Has Made Improvements

Title 26 › Subtitle Subtitle A— Income Taxes › Chapter 1— NORMAL TAXES AND SURTAXES › Subchapter O— Gain or Loss on Disposition of Property › Part II— BASIS RULES OF GENERAL APPLICATION › § 1019

Last updated Apr 5, 2026|Official source

Summary

If a tenant makes improvements and the owner gets income that is excluded under section 109, the owner must not change the property's tax basis because of that excluded income. Basis means the original tax value used to figure gain or loss; adjusted basis is that value after changes like improvements or depreciation.

Full Legal Text

Title 26, §1019

Internal Revenue Code — Source: USLM XML via OLRC

Neither the basis nor the adjusted basis of any portion of real property shall, in the case of the lessor of such property, be increased or diminished on account of income derived by the lessor in respect of such property and excludable from gross income under section 109 (relating to improvements by lessee on lessor’s property).

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

2014—Pub. L. 113–295 struck out last sentence which read as follows: “If an amount representing any part of the value of real property attributable to buildings erected or other improvements made by a lessee in respect of such property was included in gross income of the lessor for any taxable year beginning before January 1, 1942, the basis of each portion of such property shall be properly adjusted for the amount so included in gross income.”

Statutory Notes and Related Subsidiaries

Effective Date

of 2014 AmendmentAmendment by Pub. L. 113–295 effective Dec. 19, 2014, subject to a

Savings Provision

, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title.

Reference

Citations & Metadata

Citation

26 U.S.C. § 1019

Title 26 — Internal Revenue Code

Last Updated

Apr 5, 2026

Release point: 119-73not60