Title 26 — Internal Revenue CodeRelease 119-73not60
§1043 Sale of Property to Comply with Conflict-of-interest Requirements
Title 26 › Subtitle Subtitle A— Income Taxes › Chapter 1— NORMAL TAXES AND SURTAXES › Subchapter O— Gain or Loss on Disposition of Property › Part III— COMMON NONTAXABLE EXCHANGES › § 1043
Summary
If a qualifying federal officer or judge has to sell property because of a written divestiture order, they can choose to delay reporting gain on that sale. They will only have to report gain if the money they got from the sale is more than the cost of certain allowed investments they buy within 60 days after the sale. If some gain is not reported, that amount reduces the tax basis of the allowed investments in the order they were bought. Definitions — eligible person: an executive-branch officer or employee or a judicial officer (not a “special Government employee”), and a spouse, minor, or dependent child whose property is treated as theirs. Certificate of divestiture: a written order saying sale is needed to avoid conflict of interest, issued by the President or the Office of Government Ethics for executive people, or by the Judicial Conference for judges, and naming the property. Permitted property: U.S. government obligations or diversified funds approved by the Office of Government Ethics. Trustee rule and list of judicial officers are described in the law.
Full Legal Text
Title 26, §1043
Internal Revenue Code — Source: USLM XML via OLRC
(a)If an eligible person sells any property pursuant to a certificate of divestiture, at the election of the taxpayer, gain from such sale shall be recognized only to the extent that the amount realized on such sale exceeds the cost (to the extent not previously taken into account under this subsection) of any permitted property purchased by the taxpayer during the 60-day period beginning on the date of such sale.
(b)For purposes of this section—
(1)The term “eligible person” means—
(A)an officer or employee of the executive branch, or a judicial officer, of the Federal Government, but does not mean a special Government employee as defined in section 202 of title 18, United States Code, and
(B)any spouse or minor or dependent child whose ownership of any property is attributable under any statute, regulation, rule, judicial canon, or executive order referred to in paragraph (2) to a person referred to in subparagraph (A).
(2)The term “certificate of divestiture” means any written determination—
(A)that states that divestiture of specific property is reasonably necessary to comply with any Federal conflict of interest statute, regulation, rule, judicial canon, or executive order (including section 208 of title 18, United States Code), or requested by a congressional committee as a condition of confirmation,
(B)that has been issued by the President or the Director of the Office of Government Ethics, in the case of executive branch officers or employees, or by the Judicial Conference of the United States (or its designee), in the case of judicial officers, and
(C)that identifies the specific property to be divested.
(3)The term “permitted property” means any obligation of the United States or any diversified investment fund approved by regulations issued by the Office of Government Ethics.
(4)The taxpayer shall be considered to have purchased any permitted property if, but for subsection (c), the unadjusted basis of such property would be its cost within the meaning of section 1012.
(5)For purposes of this section, the trustee of a trust shall be treated as an eligible person with respect to property which is held in the trust if—
(A)any person referred to in paragraph (1)(A) has a beneficial interest in the principal or income of the trust, or
(B)any person referred to in paragraph (1)(B) has a beneficial interest in the principal or income of the trust and such interest is attributable under any statute, regulation, rule, judicial canon, or executive order referred to in paragraph (2) to a person referred to in paragraph (1)(A).
(6)The term “judicial officer” means the Chief Justice of the United States, the Associate Justices of the Supreme Court, and the judges of the United States courts of appeals, United States district courts, including the district courts in Guam, the Northern Mariana Islands, and the Virgin Islands, Court of Appeals for the Federal Circuit, Court of International Trade, Tax Court, Court of Federal Claims, Court of Appeals for Veterans Claims, United States Court of Appeals for the Armed Forces, and any court created by Act of Congress, the judges of which are entitled to hold office during good behavior.
(c)If gain from the sale of any property 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 permitted property which is purchased by the taxpayer during the 60-day period described in subsection (a).
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
2006—Subsec. (b)(1)(A). Pub. L. 109–432, § 418(a)(1)(A), inserted “, or a judicial officer,” after “executive branch”. Subsec. (b)(1)(B), (2)(A). Pub. L. 109–432, § 418(a)(1)(B), (2)(A), inserted “judicial canon,” after “rule,”. Subsec. (b)(2)(B). Pub. L. 109–432, § 418(a)(2)(B), inserted “in the case of executive branch officers or employees, or by the Judicial Conference of the United States (or its designee), in the case of judicial officers,” after “Ethics,”. Subsec. (b)(5)(B). Pub. L. 109–432, § 418(a)(3), inserted “judicial canon,” after “rule,”. Subsec. (b)(6). Pub. L. 109–432, § 418(b), added par. (6). 1990—Subsec. (a). Pub. L. 101–508 substituted “to the extent not previously taken into account under this subsection” for “reduced by any basis adjustment under subsection (c) attributable to a prior sale”. Subsec. (b)(5). Pub. L. 101–280 added par. (5).
Statutory Notes and Related Subsidiaries
Effective Date
of 2006 Amendment Pub. L. 109–432, div. A, title IV, § 418(c), Dec. 20, 2006, 120 Stat. 2967, provided that: “The
Amendments
made by this section [amending this section] shall apply to sales after the date of enactment of this Act [Dec. 20, 2006].”
Effective Date
of 1990 Amendment Pub. L. 101–508, title XI, § 11703(a)(2), Nov. 5, 1990, 104 Stat. 1388–517, provided that: “The amendment made by paragraph (1) [amending this section] shall apply to sales after
November 30, 1989.” Pub. L. 101–280, § 6(a)(3),
May 4, 1990, 104 Stat. 160, provided that: “The amendment made by paragraph (1) [amending this section] and the provisions of paragraph (2) [set out below] shall apply to sales after
November 30, 1989.”
Effective Date
Section applicable to sales after Nov. 30, 1989, see section 502(c) of Pub. L. 101–194, set out as an
Effective Date
of 1989 Amendment note under section 1016 of this title. Property Sold Before
June 19, 1990 Pub. L. 101–280, § 6(a)(2),
May 4, 1990, 104 Stat. 160, provided that: “(A) For purposes of section 1043 of such Code—“(i) any property sold before
June 19, 1990, shall be treated as sold pursuant to a certificate of divestiture (as defined in subsection (b)(2) thereof) if such a certificate is issued with respect to such sale before such date, and “(ii) in any such case, the 60-day period referred to in subsection (a) thereof shall not expire before the end of the 60-day period beginning on the date on which the certificate of divestiture was issued. “(B) Notwithstanding subparagraph (A), section 1043 of such Code shall not apply to any sale before
April 19, 1990, unless—“(i) the sale was made in order to comply with an ethics agreement or pursuant to specific direction from the appropriate agency or confirming committee, and “(ii) the justification for the sale meets the criteria set forth in subsection (b)(2)(A) thereof as implemented by the interim
Regulations
implementing such section 1043, published on April 18, 1990.”
Reference
Citations & Metadata
Citation
26 U.S.C. § 1043
Title 26 — Internal Revenue Code
Last Updated
Apr 5, 2026
Release point: 119-73not60