26 U.S.C. § 1239
§ 1239. Gain from sale of depreciable property between certain related taxpayers
No plain-English explainer yet. Below is the official text. Explainers are being added section by section.
History
Part of the code since 1954. Last changed August 5, 1997 by the Taxpayer Relief Act of 1997.
Every change, newest first (9)
- August 5, 1997Taxpayer Relief Act of 1997
- October 22, 1986Tax Reform Act of 1986
- July 18, 1984Deficit Reduction Act of 1984
- January 12, 1983Public Law 97-448
- October 19, 1980Public Law 96-471
- November 6, 1978Revenue Act of 1978
- October 4, 1976Tax Reform Act of 1976
- September 2, 1958Public Law 85-866
- August 16, 1954Internal Revenue Code of 1954 (original text)
The law as written
Current through Public Law 119-102. Amendment notes omitted.
Structure
In the case of a sale or exchange of property, directly or indirectly, between related persons, any gain recognized to the transferor shall be treated as ordinary income if such property is, in the hands of the transferee, of a character which is subject to the allowance for depreciation provided in section 167.
For purposes of subsection (a), the term “related persons” means—
a person and all entities which are controlled entities with respect to such person,
a taxpayer and any trust in which such taxpayer (or his spouse) is a beneficiary, unless such beneficiary’s interest in the trust is a remote contingent interest (within the meaning of section 318(a)(3)(B)(i)), and
except in the case of a sale or exchange in satisfaction of a pecuniary bequest, an executor of an estate and a beneficiary of such estate.
For purposes of this section, the term “controlled entity” means, with respect to any person—
a corporation more than 50 percent of the value of the outstanding stock of which is owned (directly or indirectly) by or for such person,
a partnership more than 50 percent of the capital interest or profits interest in which is owned (directly or indirectly) by or for such person, and
any entity which is a related person to such person under paragraph (3), (10), (11), or (12) of section 267(b).
For purposes of this section, ownership shall be determined in accordance with rules similar to the rules under section 267(c) (other than paragraph (3) thereof).
For purposes of subsection (a), the term “related person” also includes—
an employer and any person related to the employer (within the meaning of subsection (b)), and
a welfare benefit fund (within the meaning of section 419(e)) which is controlled directly or indirectly by persons referred to in paragraph (1).
For purposes of this section, a patent application shall be treated as property which, in the hands of the transferee, is of a character which is subject to the allowance for depreciation provided in section 167.