EXCLUSION FROM GROSS INCOME OF GAIN ON SALE OR EXCHANGE OF RESIDENCE OF INDIVIDUAL WHO HAS ATTAINED AGE 65.

SEC. 206. EXCLUSION FROM GROSS INCOME OF GAIN ON SALE OR EXCHANGE OF RESIDENCE OF INDIVIDUAL WHO HAS ATTAINED AGE 65. (a) In General.—Part III of subchapter B of chapter 1 (relating to items specifically excluded from gross income) is amended by redesignating section 121 as section 122 and by inserting before such section the following new section: “SEC. 121. GAIN FROM SALE OR EXCHANGE OF RESIDENCE OF INDIVIDUAL WHO HAS ATTAINED AGE 65. “(a) General Rule.—At the election of the taxpayer, gross income does not include gain from the sale or exchange of property if— “(1) the taxpayer has attained the age of 65 before the date of such sale or exchange, and “(2) during the 8-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as his principal residence for periods aggregating 5 years or more. “(b) Limitations.— “(1) Where adjusted sales price exceeds $20,000.—If the adjusted sales price of the property sold or exchanged exceeds $20,000, subsection (a) shall apply to that portion of the gain which bears the same ratio to the total amount of such gain as $20,000 bears to such adjusted sales price. For purposes of the preceding sentence, the term ‘adjusted sales price’ has the meaning assigned to such term by section 1034(b) (1) (determined without regard to subsection (d) (7) of this section). “(2) Application to only one sale or exchange.—Subsection (a) shall not apply to any sale or exchange by the taxpayer if an election by the taxpayer or his spouse under subsection (a) with respect to any other sale or exchange is in effect. “(c) Election.—An election under subsection (a) may be made or revoked at any time before the expiration of the period for making a claim for credit or refund of the tax imposed by this chapter for the taxable year in which the sale or exchange occurred, and shall be made or revoked in such manner as the Secretary or his delegate shall by regulations prescribe. In the case of a taxpayer who is married, an election under subsection (a) or a revocation thereof may be made only if his spouse joins in such election or revocation. 78 Stat. 39 “(d) Special Rules.— “(1) Property held jointly by husband and wife.—For purpose of this section, if— “(A) property is field by a husband and wife as joint tenants, tenants by the entirety, or community property, “(B) such husband and wile make a joint return under section 6013 for the taxable year of the sale or exchange, and “(C) one spouse satisfies the age, holding, and use requirements of subsection (a) with respect to such property, then both husband and wife shall be treated as satisfying the age, holding, and use requirements of subsection (a) with respect to such property. “(2) Property of deceased spouse.—For purposes of this section, in the case of an unmarried individual whose spouse is deceased on the date of the sale or exchange of property, if— “(A) the deceased spouse (during the 8-year period ending on the date of the sale or exchange) satisfied the holding and use requirements of subsection (a)(2) with respect to such property, and “(B) no election by the deceased spouse under subsection (a) is in effect with respect to a prior sale or exchange, then such individual shall be treated as satisfying the holding and use requirements of subsection (a)(2) with respect to such property. “(3) Tenant-stockholder in cooperative housing corporation.—For purposes of this section, if the taxpayer holds stock as a tenant-stockholder (as defined in section 216) in a cooperative housing corporation (as defined in such section), then— “(A) the holding requirements of subsection (a) (2) shall be applied to the holding of such stock, and “(B) the use requirements of subsection (a)(2) shall be applied to the house or apartment which the taxpayer was entitled to occupy as such stockholder. “(4) Involuntary conversions.—For purposes of this section, the destruction, theft, seizure, requisition, or condemnation of property shall be treated as the sale of such property. “(5) Property used in part as principal residence.—In the case or property only a portion of which, during the 8-year period ending on the date of the sale or exchange, has been owned and used by the taxpayer as his principal residence for periods aggregating 5 years or more, this section shall apply with respect to so much of the gain from the sale or exchange of such property as is determined, under regulations prescribed by the Secretary or his delegate, to be attributable to the portion of the property so owned and used by the taxpayer. “(6) Determination of marital status.—In the case of any sale or exchange, for purposes of this section— “(A) the determination of whether an individual is married shall be made as of the date of the sale or exchange: and “(B) an individual legally separated from his spouse under a decree of divorce or of separate maintenance shall not be considered as married. “(7) Application of sections 1033 and 1034.—In applying sections 1033 (relating to involuntary conversions) and 1034 (relating to sale or exchange of residence), the amount, realized from the sale or exchange of properly shall be treated as being the amount determined without regard to this section, reduced by 78 Stat. 40the amount of gain not included in gross income pursuant to an election under this section.” (b) Technical and Clerical Amendments.— (1) Section 6012(c) (relating to persons required to make returns of income) is amended to read as follows: “(c) Certain Income Earned Abroad or From Sale of Residence.—For purposes of this section, gross income shall be computed without regard to the exclusion provided for in section 121 (relating to sale of residence by individual who has attained age 65) and without regard to the exclusion provided for in section 911 (relating to earned income from sources without the United States).” (2) The table of sections for part III of subchapter B of chapter 1 is amended by striking out “Sec. 121. Cross references to other Acts.” and inserting in lieu thereof “Sec. 121. Gain from sale or exchange of residence of individual who has attained age 65. “Sec. 122. Cross references to other Acts.” (3) Section 1033(h) (relating to involuntary conversions) is amended by adding at the end thereof the following new paragraph: “(3) For exclusion from gross income of certain gain from involuntary conversion of residence of taxpayer who has attained age 65, see section 121.” (4) Section 1034 (relating to sale or exchange of residence) is amended by adding at the end thereof the following new subsection: “(k) Cross Reference.— “For exclusion from gross income of certain gain from sale or exchange of residence of taxpayer who has attained age 65, see section 121.” (e) Effective Date.—The amendments made by this section shall apply to dispositions after December 31, 1963, in taxable years ending after such date.