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139 STAT. 225 PUBLIC LAW 119–21—JULY 4, 2025 January 1 following the date on which such qualified oppor- tunity zone was certified and designated by the Secretary under subsection (b)(1)(B).’’. (4) EFFECTIVE DATE.—The amendments made by this sub- section shall apply to areas designated under section 1400Z- 1 of the Internal Revenue Code of 1986 after the date of the enactment of this Act. (c) APPLICATION OF SPECIAL RULES FOR CAPITAL GAINS.— (1) REPEAL OF SUNSET ON ELECTION.—Section 1400Z-2(a)(2) is amended to read as follows: ‘‘(2) ELECTION.—No election may be made under paragraph (1) with respect to a sale or exchange if an election previously made with respect to such sale or exchange is in effect.’’. (2) MODIFICATION OF RULES FOR DEFERRAL OF GAIN.—Sec- tion 1400Z-2(b) is amended to read as follows: ‘‘(b) DEFERRAL OF GAIN INVESTED IN OPPORTUNITY ZONE PROP- ERTY.— ‘‘(1) YEAR OF INCLUSION.—Gain to which subsection (a)(1)(B) applies shall be included in gross income in the taxable year which includes the earlier of— ‘‘(A) the date on which such investment is sold or exchanged, or ‘‘(B) the date which is 5 years after the date the invest- ment in the qualified opportunity fund was made. ‘‘(2) AMOUNT INCLUDIBLE.— ‘‘(A) IN GENERAL.—The amount of gain included in gross income under subsection (a)(1)(B) shall be the excess of— ‘‘(i) the lesser of the amount of gain excluded under subsection (a)(1)(A) or the fair market value of the investment as determined as of the date described in paragraph (1), over ‘‘(ii) the taxpayer’s basis in the investment. ‘‘(B) DETERMINATION OF BASIS.— ‘‘(i) IN GENERAL.—Except as otherwise provided in this subparagraph or subsection (c), the taxpayer’s basis in the investment shall be zero. ‘‘(ii) INCREASE FOR GAIN RECOGNIZED UNDER SUB- SECTION (a)(1)(B).—The basis in the investment shall be increased by the amount of gain recognized by rea- son of subsection (a)(1)(B) with respect to such invest- ment. ‘‘(iii) INVESTMENTS HELD FOR 5 YEARS.— ‘‘(I) IN GENERAL.—In the case of any invest- ment held for at least 5 years, the basis of such investment shall be increased by an amount equal to 10 percent (30 percent in the case of any invest- ment in a qualified rural opportunity fund) of the amount of gain deferred by reason of subsection (a)(1)(A). ‘‘(II) APPLICATION OF INCREASE.—For purposes of this subsection, any increase in basis under this clause shall be treated as occurring before the date described in paragraph (1)(B). ‘‘(C) QUALIFIED RURAL OPPORTUNITY FUND.—For pur- poses of subparagraph (B)(iii)— Definitions. Applicability. 26 USC 1400Z–1 note.