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TITLE 26-INTERNAL REVENUE CODE on such approved disposition exceeds the cost of such other qualified housing project. An election under this subsection shall be made at such time and in such manner as the Secretary prescribes by regulations, (b) Definitions For purposes of this section- (1) Qualified housing project The term "qualified housing project" means a project to provide rental or cooperative housing for lower income families- (A) with respect to which a mortgage is insured under section 221(d)(3) or 236 of the National Housing Act, and (B) with respect to which the owner is, under such sections or regulations issued thereunder- (I) limited as to the rate of return on his investment in the project, and (ii) limited as to rentals or occupancy charges for units in the project. (2) Approved disposition The term "approved disposition" means a sale or other disposition of a qualified hous- ing project to the tenants or occupants of units in such project, or to a cooperative or other nonprofit organization formed solely for the benefit of such tenants or occupants, which sale or disposition is approved by the Secretary of Housing and Urban Develop- ment under section 221(d)(3) or 236 of the National Housing Act or regulations issued under such sections. (3) Reinvestment period The reinvestment period, with respect to an approved disposition of a qualified housing project, is the period beginning one year before the date of such approved disposition and ending- (A) one year after the close of the first taxable year in which any part of the gain from such approved disposition is realized, or (B) subject to such terms and conditions as may be specified by the Secretary, at the close of such later date as the Secretary may designate on application by the tax- payer. Such application shall be made at such time and in such manner as the Secre- tary prescribes by regulations. (4) Net amount realized The net amount realized on an approved disposition of a qualified housing project is the amount realized reduced by- (A) the expenses paid or incurred which are directly connected with such approved disposition, and (B) the amount of taxes (other than income taxes) paid or incurred which are at- tributable to such approved disposition. (c) Special rules For purposes of applying subsection (a)(2) with respect to an approved disposition- (1) no property acquired by the taxpayer before the date of the approved disposition shall be taken into account unless such prop- erty is held by the taxpayer on such date, and (2) no property acquired by the taxpayer shall be taken into account unless, except as provided in subsection (d), the unadjusted basis of such property is its cost within the meaning of section 1012. (d) Basis of other qualified housing project If the taxpayer makes an election under sub. section (a) with respect to an approved disposi- tion, the basis of the qualified housing project described in subsection (a)(2) shall be its cost reduced by an amount equal to the amount of gain not recognized by reason of the applica- tion of subsection (a). (e) Assessment of deficiencies (1) Deficiency attributable to gain If the taxpayer has made an election under subsection (a) with respect to an approved disposition- (A) the statutory period for the assess- ment of any deficiency, for any taxable year in which any part of the gain on such ap- proved disposition is realized, attributable to the gain on such approved disposition shall not expire prior to the expiration of 3 years from the date the Secretary is noti- fied by the taxpayer (in such manner as the Secretary may by regulations prescribe) of the construction, reconstruction, or acquisi- tion of another qualified housing project or of the failure to construct, reconstruct, or acquire another qualified housing project, and (B) such deficiency may be assessed before the expiration of such 3-year period notwithstanding the provisions of section 6212(c) or the provision of any other law or rule of law which would otherwise prevent such assessment. (2) Time for assessment of other deficiencies attrib- utable to election If a taxpayer has made an election under subsection (a) with respect to an approved disposition and another qualified housing project is constructed, reconstructed, or ac- quired before the beginning of the last tax- able year in which any part of the gain upon such approved disposition is realized, any de- ficiency, to the extent resulting from such election, for any taxable year ending before such last taxable year may be assessed (not- withstanding the provisions of section 6212 (c) or 6501 or the provisions of any other law or rule of law which would otherwise prevent such assessment) at any time before the expi- ration of the period within which a deficiency for such last taxable year may be assessed. (Added Pub. L. 91-172, title IX, § 910(a), Dec. 30, 1969, 83 Stat. 718, and amended Pub. L. 94- 455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.) REFEREczS IN TEXT Sections 221 and 236 of the National Housing Act, referred to in subsecs. (b)(1)(A), (2), are classified to sections 17151 and 1715z-1, respectively, of Title 12, Banks and Banking. AMENDMENTS 1976-Subsecs. (a), (b)(3)(B), (e). Pub. L. 94-455 struck out "or his delegate" following "Secretary". EFFECTivE DATz Section 910(d) of Pub. L. 91-172 provided that: "The amendments made by this section [enacting this sec- Page 654 § 1039