§1223 — Holding period of property
30 cases·10 followed·2 distinguished·1 overruled·17 cited—33% support
Statute Text — 26 U.S.C. §1223
For purposes of this subtitle—
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 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—
an involuntary conversion described in section 1033 shall be considered an exchange of the property converted for the property acquired, and
a distribution to which section 355 (or so much of section 356 as relates to section 355) applies shall be treated as an exchange.
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.
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.
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, 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.
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.
Repealed.
Pub. L. 113–295, div. A, title II, § 221(a)(80)(C)
,
Dec. 19, 2014
,
128 Stat. 4049
.]
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.
Repealed.
Pub. L. 113–295, div. A, title II, § 221(a)(80)(C)
,
Dec. 19, 2014
,
128 Stat. 4049
.]
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—
the basis of such property in the hands of such person is determined under section 1014, and
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.
If—
property is acquired by any person in a transfer to which section 1040 applies,
such property is sold or otherwise disposed of by such person within 1 year after the decedent’s death, and
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.
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.
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.
Except for purposes of subsections (a)(2) and (c)(2)(A) of section 1202, 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.
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.
For special holding period provision relating to certain partnership distributions, see section 735(b).
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.1223-1 Determination of period for which capital assets are held
- Treas. Reg. §Treas. Reg. §1.1223-1(a) The holding period of property received in an exchange by a taxpayer includes the period for which the property which he exchanged was held by him, if the property received has the same basis in whole or in part for determining gain or loss in the hands of the taxpayer as the property exchanged.
- Treas. Reg. §Treas. Reg. §1.1223-1(b) The holding period of property in the hands of a taxpayer shall include the period during which the property was held by any other person, if such property has the same basis in whole or in part in the hands of the taxpayer for determining gain or loss from a sale or exchange as it would have in the hands of such other person.
- Treas. Reg. §Treas. Reg. §1.1223-1(c) 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.
- Treas. Reg. §Treas. Reg. §1.1223-1(d) If the acquisition of stock or securities 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, the holding period of the newly acquired securities shall include the period for which the taxpayer held the securities with respect to which the loss was not allowable.
- Treas. Reg. §Treas. Reg. §1.1223-1(e) The period for which the taxpayer has held stock, or stock subscription rights, received on a distribution shall be determined as though the stock dividend, or stock right, as the case may be, were the stock in respect of which the dividend was issued if the basis for determining gain or loss upon the sale or other disposition of such stock dividend or stock right is determined under section 307.
- Treas. Reg. §Treas. Reg. §1.1223-1(f) The period for which the taxpayer has held stock or securities issued to him by a corporation pursuant to the exercise by him of rights to acquire such stock or securities from the corporation will, in every case and whether or not the receipt of taxable gain was recognized in connection with the distribution of the rights, begin with and include the day upon which the rights to acquire such stock or securities were exercised.
- Treas. Reg. §Treas. Reg. §1.1223-1(g) The period for which the taxpayer has held a residence, the acquisition of which resulted under the provisions of section 1034 in the nonrecognition of any part of the gain realized on the sale or exchange of another residence, shall include the period for which such other residence had been held as of the date of such sale or exchange.
- Treas. Reg. §Treas. Reg. §1.1223-1(h) If a taxpayer accepts delivery of a commodity in satisfaction of a commodity futures contract, the holding period of the commodity shall include the period for which the taxpayer held the commodity futures contract, if such futures contract was a capital asset in his hands.
- Treas. Reg. §Treas. Reg. §1.1223-1(i) If shares of stock in a corporation are sold from lots purchased at different dates or at different prices and the identity of the lots cannot be determined, the rules prescribed by the regulations under section 1012 for determining the cost or other basis of such stocks so sold or transferred shall also apply for the purpose of determining the holding period of such stock.
- Treas. Reg. §Treas. Reg. §1.1223-1(j) §1.1223-1(j)
- Treas. Reg. §Treas. Reg. §1.1223-1(k) Any reference in section 1223 or this section to another provision of the Internal Revenue Code of 1954 is, where applicable, to be deemed a reference to the corresponding provision of the Internal Revenue Code of 1939, or prior internal revenue laws.
- Treas. Reg. §Treas. Reg. §1.1223-1(l) Effective/applicability date.
- Treas. Reg. §Treas. Reg. §1.1223-3 Rules relating to the holding periods of partnership interests
- Treas. Reg. §Treas. Reg. §1.1223-3(a) In general.
- Treas. Reg. §Treas. Reg. §1.1223-3(b) Accounting for holding periods of an interest in a partnership—(1) General rule.
- Treas. Reg. §Treas. Reg. §1.1223-3(c) Sale or exchange of all or a portion of an interest in a partnership—(1) Sale or exchange of entire interest in a partnership.
- Treas. Reg. §Treas. Reg. §1.1223-3(d) Distributions—(1) In general.
- Treas. Reg. §Treas. Reg. §1.1223-3(e) Section 751(c) assets.
- Treas. Reg. §Treas. Reg. §1.1223-3(f) Examples.
- Treas. Reg. §Treas. Reg. §1.1223-3(g) Applicability dates.
- Treas. Reg. §Treas. Reg. §1.1223-3(i) On January 1, 1996, A contributes property with a basis of $10 and a fair market value of $10,000 in exchange for an interest in a partnership (ABC).
30 Citing Cases
The argument continues that, because JSS was a single-member LLC, JS Investments did not receive a tacked holding period in their partnership interests in JSS under section 1223(1) and therefore, JS Investments’ share of JSS’s charitable contribution deduction is limited under section 170(e).