In the case of any sale of a qualified empowerment zone asset held by the taxpayer for more than 1 year 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 empowerment zone asset (with respect to the same zone as the asset sold) 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.
For purposes of this section—
The term "qualified empowerment zone asset" means any property which would be a qualified community asset (as defined in section 1400F) if in section 1400F—
(i) references to empowerment zones were substituted for references to renewal communities,
(ii) references to enterprise zone businesses (as defined in section 1397C) were substituted for references to renewal community businesses, and
(iii) the date of the enactment of this paragraph were substituted for "December 31, 2001" each place it appears.
The District of Columbia Enterprise Zone shall not be treated as an empowerment zone for purposes of this section.
This section shall not apply to—
(A) any gain which is treated as ordinary income for purposes of this subtitle, and
(B) any gain which is attributable to real property, or an intangible asset, which is not an integral part of an enterprise zone business.
A taxpayer shall be treated as having purchased any property if, but for paragraph (4), the unadjusted basis of such property in the hands of the taxpayer would be its cost (within the meaning of section 1012).
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 empowerment zone asset which is purchased by the taxpayer during the 60-day period described in subsection (a). This paragraph shall not apply for purposes of section 1202.
For purposes of determining whether the nonrecognition of gain under subsection (a) applies to any qualified empowerment zone asset which is sold—
(A) the taxpayer's holding period for such asset and the asset referred to in subsection (a)(1) shall be determined without regard to section 1223, and
(B) only the first year of the taxpayer's holding period for the asset referred to in subsection (a)(1) shall be taken into account for purposes of paragraphs (2)(A)(iii), (3)(C), and (4)(A)(iii) of section 1400F(b).
(Added Pub. L. 106–554, §1(a)(7) [title I, §116(a)(3)], Dec. 21, 2000, 114 Stat. 2763, 2763A–602.)
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Last modified: October 26, 2015