clause (iii), the basis of such property shall 
be increased by an amount equal to 5 per-
cent of the amount of gain deferred by rea-
son of subsection (a)(1)(A). 
‘‘(c) SPECIAL RULE FOR INVESTMENTS HELD FOR 
AT LEAST 10 YEARS.—In the case of any investment held 
by the taxpayer for at least 10 years and with respect to 
which the taxpayer makes an election under this sub-
section, the basis of such property shall be equal to the 
fair market value of such investment on the date that the 
investment is sold or exchanged. 
‘‘(d) QUALIFIED RURAL OPPORTUNITY FUND.—For 
purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified rural 
opportunity fund’ means any investment vehicle 
which is organized as a corporation or a partnership 
for the purpose of investing in qualified rural oppor-
tunity zone property (other than another qualified 
rural opportunity fund) that holds at least 90 per-
cent of its assets in qualified rural opportunity zone 
property, determined by the average of the percent-
age of qualified rural opportunity zone property held 
in the fund as measured— 
‘‘(A) on the last day of the first 6-month 
period of the taxable year of the fund, and 
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‘‘(B) on the last day of the taxable year of 
the fund. 
‘‘(2) QUALIFIED
RURAL
OPPORTUNITY
ZONE 
PROPERTY.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
rural opportunity zone property’ means prop-
erty which is— 
‘‘(i) qualified rural opportunity zone 
stock, 
‘‘(ii) qualified rural opportunity zone 
partnership interest, or 
‘‘(iii) qualified rural opportunity zone 
business property. 
‘‘(B) QUALIFIED
RURAL
OPPORTUNITY 
ZONE STOCK.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), the term ‘qualified 
rural opportunity zone stock’ means any 
stock in a domestic corporation if— 
‘‘(I) such stock is acquired by the 
qualified rural opportunity fund after 
December 31, 2023, at its original 
issue (directly or through an under-
writer) from the corporation solely in 
exchange for cash, 
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‘‘(II) as of the time such stock 
was issued, such corporation was a 
qualified rural opportunity zone busi-
ness (or, in the case of a new corpora-
tion, such corporation was being orga-
nized for purposes of being a qualified 
rural opportunity zone business), and 
‘‘(III) during substantially all of 
the qualified rural opportunity fund’s 
holding period for such stock, such 
corporation qualified as a qualified 
rural opportunity zone business. 
‘‘(ii) REDEMPTIONS.—A rule similar 
to the rule of section 1202(c)(3) shall 
apply for purposes of this paragraph. 
‘‘(C) QUALIFIED
RURAL
OPPORTUNITY 
ZONE
PARTNERSHIP
INTEREST.—The term 
‘qualified rural opportunity zone partnership in-
terest’ means any capital or profits interest in 
a domestic partnership if— 
‘‘(i) such interest is acquired by the 
qualified rural opportunity fund after De-
cember 31, 2023, from the partnership 
solely in exchange for cash, 
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‘‘(ii) as of the time such interest was 
acquired, such partnership was a qualified 
rural opportunity zone business (or, in the 
case of a new partnership, such partner-
ship was being organized for purposes of 
being a qualified rural opportunity zone 
business), and 
‘‘(iii) during substantially all of the 
qualified rural opportunity fund’s holding 
period for such interest, such partnership 
qualified as a qualified rural opportunity 
zone business. 
‘‘(D) QUALIFIED
RURAL
OPPORTUNITY 
ZONE BUSINESS PROPERTY.— 
‘‘(i) IN GENERAL.—The term ‘quali-
fied rural opportunity zone business prop-
erty’ means tangible property used in a 
trade or business of the qualified rural op-
portunity fund if— 
‘‘(I) such property was acquired 
by the qualified rural opportunity 
fund by purchase (as defined in sec-
tion 179(d)(2)) after December 31, 
2023, 
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‘‘(II) the original use of such 
property in the qualified rural oppor-
tunity zone commences with the quali-
fied rural opportunity fund or the 
qualified rural opportunity fund sub-
stantially improves the property, and 
‘‘(III) during substantially all of 
the qualified rural opportunity fund’s 
holding period for such property, sub-
stantially all of the use of such prop-
erty was in a qualified rural oppor-
tunity zone. 
‘‘(ii) SUBSTANTIAL IMPROVEMENT.— 
For purposes of subparagraph (A)(ii), 
property shall be treated as substantially 
improved by the qualified rural opportunity 
fund only if, during any 30-month period 
beginning after the date of acquisition of 
such property, additions to basis with re-
spect to such property in the hands of the 
qualified rural opportunity fund exceed an 
amount equal to the adjusted basis of such 
property at the beginning of such 30- 
month period in the hands of the qualified 
rural opportunity fund. 
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‘‘(iii) RELATED
PARTY.—For pur-
poses of subparagraph (A)(i), the related 
person rule of section 179(d)(2) shall be 
applied pursuant to subsection (e)(2) in 
lieu of the application of such rule in sec-
tion 179(d)(2)(A). 
‘‘(3) QUALIFIED
RURAL
OPPORTUNITY
ZONE 
BUSINESS.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
rural opportunity zone business’ means a trade 
or business— 
‘‘(i) in which substantially all of the 
tangible property owned or leased by the 
taxpayer is qualified rural opportunity zone 
business property (determined by sub-
stituting ‘qualified rural opportunity zone 
business’ for ‘qualified rural opportunity 
fund’ each place it appears in paragraph 
(2)(D)), 
‘‘(ii) which satisfies the requirements 
of paragraphs (2), (4), and (8) of section 
1397C(b), and 
‘‘(iii) which is not described in section 
144(c)(6)(B). 
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‘‘(B) SPECIAL
RULE.—For purposes of 
subparagraph (A), tangible property that ceases 
to be a qualified rural opportunity zone busi-
ness property shall continue to be treated as a 
qualified rural opportunity zone business prop-
erty for the lesser of— 
‘‘(i) 5 years after the date on which 
such tangible property ceases to be so 
qualified, or 
‘‘(ii) the date on which such tangible 
property is no longer held by the qualified 
rural opportunity zone business. 
‘‘(4) QUALIFIED RURAL OPPORTUNITY ZONE.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
rural opportunity zone’ means any population 
census tract which— 
‘‘(i) is located in a rural county, and 
‘‘(ii) is in persistent poverty (as deter-
mined by the Bureau of the Census using 
the same methodology and data as used for 
purposes of the May 2023 report of such 
Bureau entitled ‘Persistent Poverty in 
Counties and Census Tracts’). 
‘‘(B) RURAL
COUNTY.—The term ‘rural 
county’ means any county if more than 50 per-
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