ROLLOVER OF GAIN FROM SALE OF QUALIFIED STOCK.

SEC. 313. ROLLOVER OF GAIN FROM SALE OF QUALIFIED STOCK. (a) In General.—Part III of subchapter O of chapter 1 is amended by adding at the end the following new section: “SEC. 1045. ROLLOVER OF GAIN FROM QUALIFIED SMALL BUSINESS STOCK TO ANOTHER QUALIFIED SMALL BUSINESS STOCK. “(a) Nonrecognition of Gain.—In the case of any sale of qualified small business stock held by an individual for more than 6 months and with respect to which such individual 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.111 STAT. 842 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— “(1) Qualified small business stock.—The term ‘qualified small business stock’ has the meaning given such term by section 1202(c). “(2) Purchase.—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). “(3) Basis adjustments.—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). “(4) Holding period.—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).”. (b) Conforming Amendments.— (1) Section 1016(a)(23) is amended— (A) by striking “or 1044” and inserting “, 1044, or 1045”, and (B) by striking “or 1044(d)” and inserting “, 1044(d), or 1045(b)(4)”. (2) Section 1223 is amended by redesignating paragraph (15) as paragraph (16) and by inserting after paragraph (14) the following new paragraph: “(15) In determining the period for which the taxpayer has held property the acquisition of which resulted under section 1045 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.”. (3) The table of sections for part III of subchapter O of chapter 1 is amended by adding at the end the following new item: “Sec. 1045. Rollover of gain from qualified small business stock to another qualified small business stock.”. (c) Effective Date.—The amendments made by this section shall apply to sales after the date of enactment of this Act.