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103D CONGRESS

1ST SESSION H. R. 1060

To amend the Internal Revenue Code of 1986 to extend the period for

the rollover of gain on the sale of a principal residence for the period

the taxpayer has substantial frozen deposits in a financial institution.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 23, 1993

Mr. REED introduced the following bill; which was referred to the Committee

on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to extend

the period for the rollover of gain on the sale of a

principal residence for the period the taxpayer has substantial frozen deposits in a financial institution.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. EXTENSION OF TIME FOR PURCHASE OF NEW

4 RESIDENCE UNDER SECTION 1034.

5 (a) GENERAL RULE.—Section 1034 of the Internal

6 Revenue Code of 1986 (relating to rollover of gain on sale

7 of principal residence) is amended by redesignating sub-
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1 section (l) as subsection (m) and by inserting after sub2 section (k) the following new subsection:

3 ‘‘(l) EXTENSION WHERE TAXPAYER HAS SUBSTAN4 TIAL FROZEN DEPOSITS.—

5 ‘‘(1) IN GENERAL.—The running of any period

6 of time specified in subsection (a) or (c) (other than

7 the 2 years referred to in subsection (c)(4)) shall be

8 suspended during any time that the taxpayer has

9 substantial frozen deposits after the date of the sale

10 of the old residence; except that any such period of

11 time as so suspended shall not extend beyond the

12 date 5 years after the date of the sale of the old res13 idence.

14 ‘‘(2) SUBSTANTIAL FROZEN DEPOSITS.—For

15 purposes of this subsection—

16 ‘‘(A) IN GENERAL.—A taxpayer shall be

17 treated as having substantial frozen deposits for

18 any period during which the aggregate frozen

19 deposits of the taxpayer exceed 50 percent of

20 the net amount realized from the sale of the old

21 residence.

22 ‘‘(B) FROZEN DEPOSIT.—The term ‘frozen

23 deposit’ means deposit in a financial institution

24 if such deposit may not be withdrawn (during

25 a period of at least 5 days) because of—
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1 ‘‘(i) the bankruptcy or insolvency of a

2 financial institution, or

3 ‘‘(ii) any requirement imposed by the

4 State in which such institution is located

5 by reason of the bankruptcy or insolvency

6 (or threat thereof) of 1 or more financial

7 institutions in such State.

8 ‘‘(C) NET AMOUNT REALIZED.—The net

9 amount realized from the sale of the old resi10 dence is the amount realized from the sale of

11 the old residence reduced—

12 ‘‘(i) as provided in subsection (b)(1),

13 and

14 ‘‘(ii) by the amount of any indebted15 ness of the taxpayer which was secured by

16 the old residence.

17 ‘‘(3) TREATMENT OF MARRIED INDIVIDUALS.—

18 If the old residence and the new residence are each

19 used by the taxpayer and the spouse of the taxpayer

20 as their principal residence, such individuals shall be

21 treated as one taxpayer for purposes of this sub22 section.’’

23 (b) EFFECTIVE DATE.—The amendment made by

24 subsection (a) shall apply to—
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1 (1) any residence sold or exchanged after De2 cember 31, 1990, and

3 (2) any residence sold or exchanged on or be4 fore such date if the period specified in section

5 1034(a) of the Internal Revenue Code of 1986

6 (without regard to the amendment made by sub7 section (a)) has not expired before January 1, 1991.

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