
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC1043]

 
                     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. 1043. Sale of property to comply with conflict-of-interest 
        requirements
        

(a) Nonrecognition of gain

    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) Definitions

    For purposes of this section--

                         (1) Eligible person

        The term ``eligible person'' means--
            (A) an officer or employee of the executive branch 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, or executive order referred to in paragraph (2) to a 
        person referred to in subparagraph (A).

                   (2) Certificate of divestiture

        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, 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, and
            (C) that identifies the specific property to be divested.

                       (3) Permitted property

        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) Purchase

        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) Special rule for trusts

        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, or executive order referred to in paragraph (2) to a 
        person referred to in paragraph (1)(A).

(c) Basis adjustments

    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).

(Added Pub. L. 101-194, title V, Sec. 502(a), Nov. 30, 1989, 103 Stat. 
1754; amended Pub. L. 101-280, Sec. 6(a)(1), May 4, 1990, 104 Stat. 160; 
Pub. L. 101-508, title XI, Sec. 11703(a)(1), Nov. 5, 1990, 104 Stat. 
1388-516.)


                               Amendments

    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).


                    Effective Date of 1990 Amendments

    Section 11703(a)(2) of Pub. L. 101-508 provided that: ``The 
amendment made by paragraph (1) [amending this section] shall apply to 
sales after November 30, 1989.''
    Section 6(a)(3) of Pub. L. 101-280 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

    Section 6(a)(2) of Pub. L. 101-280 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.''

                  Section Referred to in Other Sections

    This section is referred to in sections 1016, 1223 of this title.
