
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: 26USC1044]

 
                     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. 1044. Rollover of publicly traded securities gain into 
        specialized small business investment companies
        

(a) Nonrecognition of gain

    In the case of the sale of any publicly traded securities with 
respect to which the 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 common stock or partnership interest in a 
    specialized small business investment company 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.

This section shall not apply to any gain which is treated as ordinary 
income for purposes of this subtitle.

(b) Limitations

                    (1) Limitation on individuals

        In the case of an individual, the amount of gain which may be 
    excluded under subsection (a) for any taxable year shall not exceed 
    the lesser of--
            (A) $50,000, or
            (B) $500,000, reduced by the amount of gain excluded under 
        subsection (a) for all preceding taxable years.

                  (2) Limitation on C corporations

        In the case of a C corporation, the amount of gain which may be 
    excluded under subsection (a) for any taxable year shall not exceed 
    the lesser of--
            (A) $250,000, or
            (B) $1,000,000, reduced by the amount of gain excluded under 
        subsection (a) for all preceding taxable years.

              (3) Special rules for married individuals

        For purposes of this subsection--

        (A) Separate returns

            In the case of a separate return by a married individual, 
        paragraph (1) shall be applied by substituting ``$25,000'' for 
        ``$50,000'' and ``$250,000'' for ``$500,000''.

        (B) Allocation of gain

            In the case of any joint return, the amount of gain excluded 
        under subsection (a) for any taxable year shall be allocated 
        equally between the spouses for purposes of applying this 
        subsection to subsequent taxable years.

        (C) Marital status

            For purposes of this subsection, marital status shall be 
        determined under section 7703.

                 (4) Special rules for C corporation

        For purposes of this subsection--
            (A) all corporations which are members of the same 
        controlled group of corporations (within the meaning of section 
        52(a)) shall be treated as 1 taxpayer, and
            (B) any gain excluded under subsection (a) by a predecessor 
        of any C corporation shall be treated as having been excluded by 
        such C corporation.

(c) Definitions and special rules

    For purposes of this section--

                   (1) Publicly traded securities

        The term ``publicly traded securities'' means securities which 
    are traded on an established securities market.

                            (2) Purchase

        The taxpayer shall be considered to have purchased any property 
    if, but for subsection (d), the unadjusted basis of such property 
    would be its cost within the meaning of section 1012.

          (3) Specialized small business investment company

        The term ``specialized small business investment company'' means 
    any partnership or corporation which is licensed by the Small 
    Business Administration under section 301(d) of the Small Business 
    Investment Act of 1958 (as in effect on May 13, 1993).

                  (4) Certain entities not eligible

        This section shall not apply to any estate, trust, partnership, 
    or S corporation.

(d) Basis adjustments

    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 common stock or partnership interest 
in any specialized small business investment company which is purchased 
by the taxpayer during the 60-day period described in subsection (a). 
This subsection shall not apply for purposes of section 1202.

(Added Pub. L. 103-66, title XIII, Sec. 13114(a), Aug. 10, 1993, 107 
Stat. 430; amended Pub. L. 104-188, title I, Sec. 1703(a), Aug. 20, 
1996, 110 Stat. 1875.)

                       References in Text

    Section 301(d) of the Small Business Investment Act of 1958, 
referred to in subsec. (c)(3), was classified to section 681(d) of Title 
15, Commerce and Trade, prior to repeal by Pub. L. 104-208, div. D, 
title II, Sec. 208(b)(3)(A), Sept. 30, 1996, 110 Stat. 3009-742.


                               Amendments

    1996--Subsec. (c)(2). Pub. L. 104-188 reenacted heading without 
change and amended text generally. Prior to amendment, text read as 
follows: ``The term `purchase' has the meaning given such term by 
section 1043(b)(4).''


                    Effective Date of 1996 Amendment

    Amendment by Pub. L. 104-188 effective as if included in the 
provision of the Revenue Reconciliation Act of 1993, Pub. L. 103-66, 
Secs. 13001-13444, to which such amendment relates, see section 1703(o) 
of Pub. L. 104-188, set out as a note under section 39 of this title.


                             Effective Date

    Section applicable to sales on or after Aug. 10, 1993, in taxable 
years ending on or after such date, see section 13114(d) of Pub. L. 103-
66, set out as an Effective Date of 1993 Amendment note under section 
1016 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 45D, 1016 of this title.
