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Publication 544

Rollover of Gain From Sale of Empowerment Zone Assets

For Use in Tax Year 2014
If you sold a qualified empowerment zone asset that you held for more than 1 year, you may be able to elect to postpone part or all of the gain that you would otherwise include in income. If you make the election, you generally recognize gain on the sale only to the extent, if any, that the amount realized on the sale is more than the cost of qualified empowerment zone assets (replacement property) you purchased during the 60-day period beginning on the date of the sale. The following rules apply. See section 1397C for the definition of empowerment zone and enterprise zone business. You can find out if your business is located within an empowerment zone by using the EZ/RC Address Locator at
Qualified empowerment zone assets are
  1. Tangible property, if:
    1. You acquired the property after December 21, 2000,
    2. The original use of the property in the empowerment zone began with you, and
    3. Substantially all of the use of the property, during substantially all of the time that you held it, was in your enterprise zone business; and
  2. Stock in a domestic corporation or a capital or profits interest in a domestic partnership, if:
    1. You acquired the stock or partnership interest after December 21, 2000, solely in exchange for cash, from the corporation at its original issue (directly or through an underwriter) or from the partnership;
    2. The business was an enterprise zone business (or a new business being organized as an enterprise zone business) as of the time you acquired the stock or partnership interest; and
    3. The business qualified as an enterprise zone business during substantially all of the time you held the stock or partnership interest.
See section 1397B for more details. See the Instructions for Form 8949, and the Instructions for Schedule D (Form 1040) for details on how to report the exclusion. Report the sale or exchange of empowerment zone business property on Form 4797. See the Instructions for Form 4797.