
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC1035]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
          Subchapter O--Gain or Loss on Disposition of Property
 
                  PART III--COMMON NONTAXABLE EXCHANGES
 
Sec. 1035. Certain exchanges of insurance policies


(a) General rules

    No gain or loss shall be recognized on the exchange of--
        (1) a contract of life insurance for another contract of life 
    insurance or for an endowment or annuity contract; or
        (2) a contract of endowment insurance (A) for another contract 
    of endowment insurance which provides for regular payments beginning 
    at a date not later than the date payments would have begun under 
    the contract exchanged, or (B) for an annuity contract; or
        (3) an annuity contract for an annuity contract.

(b) Definitions

    For the purpose of this section--

                       (1) Endowment contract

        A contract of endowment insurance is a contract with an 
    insurance company which depends in part on the life expectancy of 
    the insured, but which may be payable in full in a single payment 
    during his life.

                        (2) Annuity contract

        An annuity contract is a contract to which paragraph (1) applies 
    but which may be payable during the life of the annuitant only in 
    installments.

                     (3) Life insurance contract

        A contract of life insurance is a contract to which paragraph 
    (1) applies but which is not ordinarily payable in full during the 
    life of the insured.

(c) Exchanges involving foreign persons

    To the extent provided in regulations, subsection (a) shall not 
apply to any exchange having the effect of transferring property to any 
person other than a United States person.

(d) Cross references

            (1) For rules relating to recognition of gain or loss where 
        an exchange is not solely in kind, see subsections (b) and (c) 
        of section 1031.
            (2) For rules relating to the basis of property acquired in 
        an exchange described in subsection (a), see subsection (d) of 
        section 1031.

(Aug. 16, 1954, ch. 736, 68A Stat. 309; Pub. L. 98-369, div. A, title 
II, Secs. 211(b)(15), 224(a), July 18, 1984, 98 Stat. 756, 776; Pub. L. 
99-514, title XVIII, Sec. 1828, Oct. 22, 1986, 100 Stat. 2851; Pub. L. 
105-34, title XI, Sec. 1131(b)(1), Aug. 5, 1997, 111 Stat. 979.)

                          Codification

    Another section 1131(b) of Pub. L. 105-34 enacted section 684 of 
this title.


                               Amendments

    1997--Subsecs. (c), (d). Pub. L. 105-34 added subsec. (c) and 
redesignated former subsec. (c) as (d).
    1986--Subsec. (b)(1). Pub. L. 99-514 struck out ``subject to tax 
under subchapter L'' after ``with an insurance company''.
    1984--Subsec. (b)(1). Pub. L. 98-369, Sec. 224(a), which directed 
the substitution of ``an insurance company subject to tax under 
subchapter L'' for ``a life insurance company as defined in section 
801'', was executed by making such substitution for ``a life insurance 
company as defined in section 816'' to reflect the probable intent of 
Congress and the earlier amendment by Pub. L. 98-369, Sec. 211(b)(15), 
which substituted ``as defined in section 816'' for ``as defined in 
section 801''.
    Pub. L. 98-369, Sec. 211(b)(15), substituted ``section 816'' for 
``section 801''.


                    Effective Date of 1986 Amendment

    Amendment by Pub. L. 99-514 effective, except as otherwise provided, 
as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 
98-369, div. A, to which such amendment relates, see section 1881 of 
Pub. L. 99-514, set out as a note under section 48 of this title.


                    Effective Date of 1984 Amendment

    Amendment by section 211(b)(5) of Pub. L. 98-369 applicable to 
taxable years beginning after Dec. 31, 1983, see section 215 of Pub. L. 
98-369, set out as an Effective Date note under section 801 of this 
title.
    Section 224(b) of Pub. L. 98-369 provided that: ``The amendment made 
by subsection (a) [amending this section] shall apply to all exchanges 
whether before, on, or after the date of the enactment of this Act [July 
18, 1984].''


           Plan Amendments Not Required Until January 1, 1989

    For provisions directing that if any amendments made by subtitle A 
or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or title XVIII 
[Secs. 1800-1899A] of Pub. L. 99-514 require an amendment to any plan, 
such plan amendment shall not be required to be made before the first 
plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. 
L. 99-514, as amended, set out as a note under section 401 of this 
title.

                  Section Referred to in Other Sections

    This section is referred to in section 1031 of this title.
