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TITLE 26-INTERNAL REVENUE CODE (d) Special rules (1) Property held jointly by husband and wife For purposes of this section, if- (A) property is held by a husband and wife as joint tenants, tenants by the entire- ty, or community property, (B) such husband and wife 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 re- quirements 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 de- ceased 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 re- spect to such property, and (B) no election by the deceased spouse under subsection (a) is in effect with re- spect to a prior sale or exchange, then such individual shall be treated as satis- fying the holding and use requirements of subsection (a)(2) with respect to such proper- ty. (3) Tenant-stockholder in cooperative housing cor- poration For purposes of this section, if the taxpayer holds stock as a tenant-stockholder (as de- fined in section 216) in a cooperative housing corporation (as defined in such section), then- (A) the holding requirements of subsec- tion (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 apart- ment which the taxpayer was entitled to occupy as such stockholder. (4) Involuntary conversions For purposes of this section, the destruc- tion, theft, seizure, requisition, or condemna- tion of property shall be treated as the sale of such property. (5) Property used in part as principal residence In the case of 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 resi- dence 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 reg- ulations prescribed by the Secretary, to be at- tributable 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 pur- poses of this section- (A) the determination of whether an indi- vidual 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 consid- ered as married. (7) Application of sections 1033 and 1034 In applying sections 1033 (relating to invol- untary conversions) and 1034 (relating to sale or exchange of residence), the amount real- ized from the sale or exchange of property shall be treated as being the amount deter- mined without regard to this section, reduced by the amount of gain not included in gross income pursuant to an election under this sec- tion. (Added Pub. L. 88-272, title II, § 206(a), Feb. 26, 1964, 78 Stat. 38, and amended Pub. L. 94-455, title XIV, § 1404(a), title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1733, 1834.) AMENDMENTS 1976--Subsec. (b)(1). Pub. L. 94-455, § 1404(a), substi- tuted "t35,000" for "$20,000" in three places following "price exceeds", "exchanged exceeds", and "gain as". Subsecs. (c), (d)(5). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". EFFECTIVE DATE OF 1976 AMENDMENT Section 1404(b) of Pub. L. 94-455 provided that: "The amendment made by subsection (a) [to subsec. (b)(1) of this section] shall apply to taxable years be- ginning after December 31, 1976." EFFECTIVE DATE Section 206(c) of Pub. L. 88-272 provided that: "The amendments made by this section [adding this section, redesignating former section 121 as 122, and amending sections 1033, 1034 and 6012 of this title] shall apply to dispositions after Dec. 31, 1963, in taxable years ending after such date." SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 1038, 1250, 6012 of this title. § 122, Certain reduced uniformed services retirement pay (a) General rule In the case of a member or former member of the uniformed services of the United States, gross income does not include the amount of any reduction in his retired or retainer pay pur- suant to the provisons of chapter 73 of title 10, United States Code. (b) Special rule (1) Amount excluded from gross income In the case of any individual referred to in subsection (a), all amounts received after De- cember 31, 1965, as retired or retainer pay shall be excluded from gross income until there has been so excluded an amount equal to the consideration for the contract. The preceding sentence shall apply only to the extent that the amounts received would, but for such sentence, be includible in gross income. (2) Consideration for the contract For purposes of paragraph (1) and section 72(n), the term "consideration for the con- Page 129 § 122