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

26 U.S.C. § 1045

• Title: 26 — Internal Revenue Code
• Chapter: Subchapter O—Gain or Loss on Disposition of Property
• Part: III

Text

(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—
The term "qualified small business stock" has the meaning given such term by section 1202(c).
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).
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).
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).
Rules similar to the rules of subsections (f), (g), (h), (i), (j), and (k) of section 1202 shall apply.

History

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

Editorial Notes

Editorial Notes

Amendments
1998—Subsec. (a). Pub. L. 105–206, §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, §6005(f)(2), added par. (5).

Statutory Notes and Related Subsidiaries

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.

Editorial Notes

Amendments
2025—Pub. L. 119–21, title VII, §70437(b), July 4, 2025, 139 Stat. 250, added item 1062 and renumbered former item 1062 as 1063.
2017—Pub. L. 115–97, title I, §13309(b), Dec. 22, 2017, 131 Stat. 2131, added items 1061 and 1062 and struck out former item 1061 "Cross references".
2014—Pub. L. 113–295, div. A, title II, §221(a)(78), Dec. 19, 2014, 128 Stat. 4049, struck out item 1051 "Property acquired during affiliation".
2004—Pub. L. 108–357, title VIII, §886(b)(1)(B), Oct. 22, 2004, 118 Stat. 1641, struck out item 1056 "Basis limitation for player contracts transferred in connection with the the sale of a franchise".
1997—Pub. L. 105–34, title XI, §1131(c)(5), Aug. 5, 1997, 111 Stat. 980, struck out item 1057 "Election to treat transfer to foreign trust, etc., as taxable exchange".
1986—Pub. L. 99–514, title VI, §641(b), title XII, §1248(b), Oct. 22, 1986, 100 Stat. 2283, 2584, added items 1059A and 1060 and renumbered former item 1060 as 1061.
1984—Pub. L. 98–369, div. A, title I, §53(d), July 18, 1984, 98 Stat. 568, added item 1059 and renumbered former item 1059 as 1060.
1978—Pub. L. 95–345, §2(d)(2), Aug. 15, 1978, 92 Stat. 483, added item 1058 and renumbered former item 1058 as 1059.
1976—Pub. L. 94–455, title II, §212(a)(2), title X, 1015(c), Oct. 4, 1976, 90 Stat. 1546, 1618, added items 1056 and 1057 and renumbered former item 1056 as 1058.
1963—Pub. L. 88–9, §1(d), Apr. 10, 1963, 77 Stat. 8, added item 1055 and renumbered former item 1055 as 1056.
1960—Pub. L. 86–779, §8(c), Sept. 14, 1960, 74 Stat. 1003, renumbered former item 1054 as 1055 and added new item 1054.