
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document affected by Public Law 106-554 Section 1(a)(7)]
[Document affected by Public Law 106-554 Section 1(a)(7)]
[CITE: 26USC1223]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
                 Subchapter P--Capital Gains and Losses
 
    PART III--GENERAL RULES FOR DETERMINING CAPITAL GAINS AND LOSSES
 
Sec. 1223. Holding period of property

    For purposes of this subtitle--
        (1) In determining the period for which the taxpayer has held 
    property received in an exchange, there shall be included the period 
    for which he held the property exchanged if, under this chapter, the 
    property has, for the purpose of determining gain or loss from a 
    sale or exchange, the same basis in whole or in part in his hands as 
    the property exchanged, and, in the case of such exchanges after 
    March 1, 1954, the property exchanged at the time of such exchange 
    was a capital asset as defined in section 1221 or property described 
    in section 1231. For purposes of this paragraph--
            (A) an involuntary conversion described in section 1033 
        shall be considered an exchange of the property converted for 
        the property acquired, and
            (B) a distribution to which section 355 (or so much of 
        section 356 as relates to section 355) applies shall be treated 
        as an exchange.

        (2) In determining the period for which the taxpayer has held 
    property however acquired there shall be included the period for 
    which such property was held by any other person, if under this 
    chapter such property has, for the purpose of determining gain or 
    loss from a sale or exchange, the same basis in whole or in part in 
    his hands as it would have in the hands of such other person.
        (3) In determining the period for which the taxpayer has held 
    stock or securities received upon a distribution where no gain was 
    recognized to the distributee under section 1081(c) (or under 
    section 112(g) of the Revenue Act of 1928, 45 Stat. 818, or the 
    Revenue Act of 1932, 48 Stat. 705), there shall be included the 
    period for which he held the stock or securities in the distributing 
    corporation before the receipt of the stock or securities on such 
    distribution.
        (4) In determining the period for which the taxpayer has held 
    stock or securities the acquisition of which (or the contract or 
    option to acquire which) resulted in the nondeductibility (under 
    section 1091 relating to wash sales) of the loss from the sale or 
    other disposition of substantially identical stock or securities, 
    there shall be included the period for which he held the stock or 
    securities the loss from the sale or other disposition of which was 
    not deductible.
        (5) In determining the period for which the taxpayer has held 
    stock or rights to acquire stock received on a distribution, if the 
    basis of such stock or rights is determined under section 307 (or 
    under so much of section 1052(c) as refers to section 113(a)(23) of 
    the Internal Revenue Code of 1939), there shall (under regulations 
    prescribed by the Secretary) be included the period for which he 
    held the stock in the distributing corporation before the receipt of 
    such stock or rights upon such distribution.
        (6) In determining the period for which the taxpayer has held 
    stock or securities acquired from a corporation by the exercise of 
    rights to acquire such stock or securities, there shall be included 
    only the period beginning with the date on which the right to 
    acquire was exercised.
        (7) In determining the period for which the taxpayer has held a 
    residence, the acquisition of which resulted under section 1034 (as 
    in effect on the day before the date of the enactment of the 
    Taxpayer Relief Act of 1997) in the nonrecognition of any part of 
    the gain realized on the sale or exchange of another residence, 
    there shall be included the period for which such other residence 
    had been held as of the date of such sale or exchange. For purposes 
    of this paragraph, the term ``sale or exchange'' includes an 
    involuntary conversion occurring after December 31, 1950, and before 
    January 1, 1954.
        (8) In determining the period for which the taxpayer has held a 
    commodity acquired in satisfaction of a commodity futures contract 
    (other than a commodity futures contract to which section 1256 
    applies) there shall be included the period for which he held the 
    commodity futures contract if such commodity futures contract was a 
    capital asset in his hands.
        (9) Any reference in this section to a provision of this title 
    shall, where applicable, be deemed a reference to the corresponding 
    provision of the Internal Revenue Code of 1939, or prior internal 
    revenue laws.
        (10) In determining the period for which the taxpayer has held 
    trust certificates of a trust to which subsection (d) of section 
    1246 applies, or the period for which the taxpayer has held stock in 
    a corporation to which subsection (d) of section 1246 applies, there 
    shall be included the period for which the trust or corporation (as 
    the case may be) held the stock of foreign investment companies.
        (11) In the case of a person acquiring property from a decedent 
    or to whom property passed from a decedent (within the meaning of 
    section 1014(b)), if--
            (A) the basis of such property in the hands of such person 
        is determined under section 1014, and
            (B) such property is sold or otherwise disposed of by such 
        person within 1 year after the decedent's death,

    then such person shall be considered to have held such property for 
    more than 1 year.
        (12) If--
            (A) property is acquired by any person in a transfer to 
        which section 1040 applies,
            (B) such property is sold or otherwise disposed of by such 
        person within 1 year after the decedent's death, and
            (C) such sale or disposition is to a person who is a 
        qualified heir (as defined in section 2032A(e)(1)) with respect 
        to the decedent,

    then the person making such sale or other disposition shall be 
    considered to have held such property for more than 1 year.
        (13) In determining the period for which the taxpayer has held 
    qualified replacement property (within the meaning of section 
    1042(b)) the acquisition of which resulted under section 1042 in the 
    nonrecognition of any part of the gain realized on the sale of 
    qualified securities (within the meaning of section 1042(b)), there 
    shall be included the period for which such qualified securities had 
    been held by the taxpayer.
        (14) In determining the period for which the taxpayer has held 
    property the acquisition of which resulted under section 1043 in the 
    nonrecognition of any part of the gain realized on the sale of other 
    property, there shall be included the period for which such other 
    property had been held as of the date of such sale.
        (15) Except for purposes of sections 1202(a)(2), 1202(c)(2)(A), 
    1400B(b), and 1400F(b), in determining the period for which the 
    taxpayer has held property the acquisition of which resulted under 
    section 1045 or 1397B in the nonrecognition of any part of the gain 
    realized on the sale of other property, there shall be included the 
    period for which such other property has been held as of the date of 
    such sale.
        (16) If the security to which a securities futures contract (as 
    defined in section 1234B) relates (other than a contract to which 
    section 1256 applies) is acquired in satisfaction of such contract, 
    in determining the period for which the taxpayer has held such 
    security, there shall be included the period for which the taxpayer 
    held such contract if such contract was a capital asset in the hands 
    of the taxpayer.
        (17) Cross reference.--
            For special holding period provision relating to certain 
        partnership distributions, see section 735(b).

(Aug. 16, 1954, ch. 736, 68A Stat. 323; Pub. L. 87-834, Sec. 14(b)(3), 
Oct. 16, 1962, 76 Stat. 1041; Pub. L. 91-614, title I, Sec. 101(g), Dec. 
31, 1970, 84 Stat. 1838; Pub. L. 94-455, title XIV, Sec. 1402(b)(1)(Q), 
(2), title XIX, Sec. 1906(b) (13)(A), Oct. 4, 1976, 90 Stat. 1732, 1834; 
Pub. L. 95-600, title VII, Sec. 702(c)(5), Nov. 6, 1978, 92 Stat. 2927; 
Pub. L. 96-223, title IV, Sec. 401(a), Apr. 2, 1980, 94 Stat. 299; Pub. 
L. 97-448, title I, Secs. 104(b)(3)(C), 105(c)(4), Jan. 12, 1983, 96 
Stat. 2382, 2385; Pub. L. 98-369, div. A, title I, Sec. 54(c), title V, 
Sec. 541(b)(1), title X, Sec. 1001(b)(14), (e), July 18, 1984, 98 Stat. 
569, 890, 1011, 1012; Pub. L. 100-647, title I, Sec. 1006(e)(17), Nov. 
10, 1988, 102 Stat. 3403; Pub. L. 101-194, title V, Sec. 502(b)(1), Nov. 
30, 1989, 103 Stat. 1754; Pub. L. 105-34, title III, Secs. 312(d)(9), 
313(b)(2), Aug. 5, 1997, 111 Stat. 840, 842; Pub. L. 105-206, title V, 
Sec. 5001(a)(5), title VI, Sec. 6005(d)(4), July 22, 1998, 112 Stat. 
788, 805; Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 116(b)(2), title 
IV, Sec. 401(h)(1)], Dec. 21, 2000, 114 Stat. 2763, 2763A-603, 2763A-
650.)

                       References in Text

    The Revenue Act of 1928, referred to in par. (3), is act May 29, 
1928, ch. 852, 45 Stat. 791. Section 112(g) of such act appears at 45 
Stat. 818.
    The Revenue Act of 1932, referred to in par. (3), probably means the 
Revenue Act of 1934, which is act May 10, 1934, ch. 277, 48 Stat. 680. 
Section 112(g) of such act appears at 48 Stat. 705.
    Section 113(a)(23) of the Internal Revenue Code of 1939, referred to 
in par. (5), was classified to section 113(a)(23) of former Title 26, 
Internal Revenue Code. Section 113 was repealed by section 7851(a)(1) of 
this title. For table of comparisons of the 1939 Code to the 1986 Code, 
see Table I preceding section 1 of this title. See, also, section 
7851(e) of this title for provision that references in the 1986 Code to 
a provision of the 1939 Code, not then applicable, shall be deemed a 
reference to the corresponding provision of the 1986 Code, which is then 
applicable.
    The date of the enactment of the Taxpayer Relief Act of 1997, 
referred to in par. (7), is the date of enactment of Pub. L. 105-34, 
which was approved Aug. 5, 1997.
    The Internal Revenue Code of 1939, referred to in par. (9), is act 
Feb. 10, 1939, ch. 2, 53 Stat. 1, as amended. Prior to the enactment of 
the Internal Revenue Code of 1986 [formerly I.R.C. 1954], the 1939 Code 
was classified to former Title 26, Internal Revenue Code. For table of 
comparisons of the 1939 Code to the 1986 Code, see Table I preceding 
section 1 of this title.


                               Amendments

    2000--Par. (15). Pub. L. 106-554, Sec. 1(a)(7) [title I, 
Sec. 116(b)(2)], amended par. (15) generally. Prior to amendment, par. 
(15) read as follows: ``In determining the period for which the taxpayer 
has held property the acquisition of which resulted under section 1045 
in the nonrecognition of any part of the gain realized on the sale of 
other property, there shall be included the period for which such other 
property has been held as of the date of such sale.''
    Pars. (16), (17). Pub. L. 106-554, Sec. 1(a)(7) [title IV, 
Sec. 401(h)(1)], added par. (16) and redesignated former par. (16) as 
(17).
    1998--Pars. (11), (12). Pub. L. 105-206, Sec. 6005(d)(4), 
substituted ``18 months'' for ``1 year'' in subpar. (B) and concluding 
provisions.
    Pub. L. 105-206, Sec. 5001(a)(5), substituted ``1 year'' for ``18 
months'' in subpar. (B) and concluding provisions.
    1997--Par. (7). Pub. L. 105-34, Sec. 312(d)(9), inserted ``(as in 
effect on the day before the date of the enactment of the Taxpayer 
Relief Act of 1997)'' after ``section 1034''.
    Pars. (15), (16). Pub. L. 105-34, Sec. 313(b)(2), added par. (15) 
and redesignated former par. (15) as (16).
    1989--Pars. (14), (15). Pub. L. 101-194 added par. (14) and 
redesignated former par. (14) as (15).
    1988--Par. (14). Pub. L. 100-647 amended par. (14) generally, 
substituting ``reference'' for ``references'' in heading, striking out 
``(A)'' before ``For special holding'', and striking out subpar. (B) 
which related to distributions of appreciated property to corporations.
    1984--Pars. (11), (12). Pub. L. 98-369, Sec. 1001(b)(14), (e), 
substituted ``6 months'' for ``1 year'', applicable to property acquired 
after June 22, 1984, and before Jan. 1, 1988. See Effective Date of 1984 
Amendment note below.
    Par. (13). Pub. L. 98-369, Sec. 541(b)(1), added par. (13). Former 
par. (13) redesignated (14).
    Par. (14). Pub. L. 98-369, Sec. 541(b)(1), redesignated former par. 
(13) as (14).
    Pub. L. 98-369, Sec. 54(c), designated existing cross reference as 
subpar. (A) and added subpar. (B).
    1983--Par. (8). Pub. L. 97-448, Sec. 105(c)(4), inserted ``(other 
than a commodity futures contract to which section 1256 applies)'' after 
``acquired in satisfaction of a commodity futures contract''.
    Pars. (12), (13). Pub. L. 97-448, Sec. 104(b)(3)(C), added par. (12) 
and redesignated former par. (12) as (13).
    1980--Par. (11)(A). Pub. L. 96-223 repealed the amendment made by 
Pub. L. 95-600. See 1978 Amendment note below.
    1978--Par. (11)(A). Pub. L. 95-600 inserted reference to 
determination of basis of property under section 1023. See Repeals note 
below.
    1976--Par. (5). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out ``or 
his delegate'' after ``Secretary''.
    Par. (11). Pub. L. 94-455, Sec. 1402(b)(2), provided that ``9 
months'' would be changed to ``1 year''.
    Pub. L. 94-455, Sec. 1402(b)(1)(Q), provided that ``6 months'' would 
be changed to ``9 months'' for taxable years beginning in 1977.
    1970--Pars. (11), (12). Pub. L. 91-614 added par. (11) and 
redesignated former par. (11) as (12).
    1962--Pars. (10), (11). Pub. L. 87-834 added par. (10) and 
redesignated former par. (10) as (11).


                    Effective Date of 2000 Amendment

    Amendment by section 1(a)(7) [title I, Sec. 116(b)(2)] of Pub. L. 
106-554 applicable to qualified empowerment zone assets acquired after 
Dec. 21, 2000, see section 1(a)(7) [title I, Sec. 116(c)] of Pub. L. 
106-554, set out as a note under section 1016 of this title.
    Amendment by section 1(a)(7) [title IV, Sec. 401(h)(1)] of Pub. L. 
106-554 effective Dec. 21, 2000, see section 1(a)(7) [title IV, 
Sec. 401(j)] of Pub. L. 106-554, set out as a note under section 1032 of 
this title.


                    Effective Date of 1998 Amendment

    Amendment by section 5001(a)(5) of Pub. L. 105-206 effective Jan. 1, 
1998, see section 5001(b)(2) of Pub. L. 105-206, set out as a note under 
section 1 of this title.
    Amendment by section 6005(d)(4) of 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 of 1997 Amendment

    Amendment by section 312(d)(9) of Pub. L. 105-34 applicable to sales 
and exchanges after May 6, 1997, with certain exceptions, see section 
312(d) of Pub. L. 105-34, set out as a note under section 121 of this 
title.
    Amendment by section 313(b)(2) of Pub. L. 105-34 applicable to sales 
after Aug. 5, 1997, see section 313(c) of Pub. L. 105-34, set out as a 
note under section 1016 of this title.


                    Effective Date of 1989 Amendment

    Amendment by Pub. L. 101-194 applicable to sales after Nov. 30, 
1989, see section 502(c) of Pub. L. 101-194, set out as a note under 
section 1016 of this title.


                    Effective Date of 1988 Amendment

    Amendment by Pub. L. 100-647 effective, except as otherwise 
provided, as if included in the provision of the Tax Reform Act of 1986, 
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of 
Pub. L. 100-647, set out as a note under section 1 of this title.


                    Effective Date of 1984 Amendment

    Amendment by section 541(b)(1) of Pub. L. 98-369 applicable to sales 
of securities in taxable years beginning after July 18, 1984, see 
section 541(c) of Pub. L. 98-369, set out as an Effective Date note 
under section 1042 of this title.
    Amendment by section 1001(b)(14) of Pub. L. 98-369 applicable to 
property acquired after June 22, 1984, and before Jan. 1, 1988, see 
section 1001(e) of Pub. L. 98-369, set out as a note under section 166 
of this title.


                    Effective Date of 1983 Amendment

    Amendment by Pub. L. 97-448 effective, except as otherwise provided, 
as if it had been included in the provision of the Economic Recovery Tax 
Act of 1981, Pub. L. 97-34, to which such amendment relates, see section 
109 of Pub. L. 97-448, set out as a note under section 1 of this title.


        Effective Date of 1980 Amendment and Revival of Prior Law

    Amendment by Pub. L. 96-223 (repealing section 702(c)(5) of Pub. L. 
95-600 and the amendments made thereby, which had amended this section) 
applicable in respect of decedents dying after Dec. 31, 1976, and except 
for certain elections, this title to be applied and administered as if 
those repealed provisions had not been enacted, see section 401(b), (e) 
of Pub. L. 96-223, set out as a note under section 1023 of this title.


                    Effective Date of 1978 Amendment

    Amendment by Pub. L. 95-600 to take effect as if included in the 
amendments and additions made by, and the appropriate provisions of Pub. 
L. 94-455, see section 702(c)(10) of Pub. L. 95-600, set out as a note 
under section 1014 of this title.


                    Effective Date of 1976 Amendment

    Section 1402(b)(1) of Pub. L. 94-455 provided that the amendment 
made by that section is effective with respect to taxable years 
beginning in 1977.
    Section 1402(b)(2) of Pub. L. 94-455 provided that the amendment 
made by that section is effective with respect to taxable years 
beginning after Dec. 31, 1977.


                    Effective Date of 1970 Amendment

    Amendment by Pub. L. 91-614 applicable with respect to decedents 
dying after Dec. 31, 1970, see section 101(j) of Pub. L. 91-614, set out 
as a note under section 2032 of this title.


                    Effective Date of 1962 Amendment

    Amendment by Pub. L. 87-834 applicable with respect to taxable years 
beginning after Dec. 31, 1962, see section 14(c) of Pub. L. 87-834, set 
out as an Effective Date note under section 1246 of this title.


                                 Repeals

    Pub. L. 95-600, Sec. 702(c)(5), cited as a credit to this section, 
and the amendments made thereby, were repealed by Pub. L. 96-223, title 
IV, Sec. 401(a), 94 Stat. 299, resulting in the text of this section 
reading as it read prior to enactment of section 702(c)(5). See 
Effective Date of 1980 Amendment and Revival of Prior Law note set out 
above.

                  Section Referred to in Other Sections

    This section is referred to in sections 121, 246, 341, 735, 818, 
1045, 1233, 1246, 1250, 1291, 1397B, 5881 of this title.
