
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: 26USC1045]

 
                     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. 1045. Rollover of gain from qualified small business stock 
        to another qualified small business stock
        

(a) Nonrecognition of gain

    In the case of any sale of qualified small business stock held by a 
taxpayer other than a corporation for more than 6 months and with 
respect to which such 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 qualified small business stock 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 title.

(b) Definitions and special rules

    For purposes of this section--

                 (1) Qualified small business stock

        The term ``qualified small business stock'' has the meaning 
    given such term by section 1202(c).

                            (2) Purchase

        A taxpayer shall be treated as having purchased any property if, 
    but for paragraph (3), the unadjusted basis of such property in the 
    hands of the taxpayer would be its cost (within the meaning of 
    section 1012).

                        (3) 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 qualified small 
    business stock which is purchased by the taxpayer during the 60-day 
    period described in subsection (a).

                         (4) Holding period

        For purposes of determining whether the nonrecognition of gain 
    under subsection (a) applies to stock which is sold--
            (A) the taxpayer's holding period for such stock and the 
        stock referred to in subsection (a)(1) shall be determined 
        without regard to section 1223, and
            (B) only the first 6 months of the taxpayer's holding period 
        for the stock referred to in subsection (a)(1) shall be taken 
        into account for purposes of applying section 1202(c)(2).

                     (5) Certain rules to apply

        Rules similar to the rules of subsections (f), (g), (h), (i), 
    (j), and (k) of section 1202 shall apply.

(Added Pub. L. 105-34, title III, Sec. 313(a), Aug. 5, 1997, 111 Stat. 
841; amended Pub. L. 105-206, title VI, Sec. 6005(f), July 22, 1998, 112 
Stat. 806.)


                               Amendments

    1998--Subsec. (a). Pub. L. 105-206, Sec. 6005(f)(1), in introductory 
provisions, substituted ``a taxpayer other than a corporation'' for ``an 
individual'' and ``such taxpayer'' for ``such individual''.
    Subsec. (b)(5). Pub. L. 105-206, Sec. 6005(f)(2), added par. (5).


                    Effective Date of 1998 Amendment

    Amendment by Pub. L. 105-206 effective, except as otherwise 
provided, as if included in the provisions of the Taxpayer Relief Act of 
1997, Pub. L. 105-34, to which such amendment relates, see section 6024 
of Pub. L. 105-206, set out as a note under section 1 of this title.


                             Effective Date

    Section applicable to sales after Aug. 5, 1997, see section 313(c) 
of Pub. L. 105-34, set out as an Effective Date of 1997 Amendment note 
under section 1016 of this title.

                  Section Referred to in Other Sections

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