No Tax on Takings Act
Summary
What This Bill Does
The No Tax on Takings Act excludes from federal gross income gain on property located in the United States when the property is converted because of eminent domain. It also covers a sale or exchange made under the threat or imminence of eminent-domain exercise, so an owner need not wait for a completed condemnation.
For a covered conversion, the ordinary Internal Revenue Code section 1033 involuntary-conversion rule does not apply. Section 1033 generally allows tax deferral when proceeds are reinvested in qualifying replacement property; the bill instead provides a gross-income exclusion without a replacement-property condition.
A taxpayer may elect not to use the new exclusion under procedures set by Treasury. That election preserves the ability to use other applicable treatment, including section 1033 when its conditions are met. Treasury must issue regulations or guidance needed to administer the rule.
The amendment applies to conversions in taxable years ending after enactment. That wording can cover a conversion earlier in the same taxable year, depending on enactment date. The operative text covers "property," while the table-of-sections amendment describes "real property," creating a drafting inconsistency. The bill states no dollar cap, income limit, holding-period rule, reinvestment requirement, or restriction to principal residences.
Who Benefits and How
Homeowners, farmers, landlords, and businesses retain more condemnation compensation because covered gain is excluded rather than merely deferred. Owners who negotiated sales under a credible threat receive the same treatment. Taxpayers can elect out when section 1033 or another consequence is preferable.
Who Bears the Burden and How
The Treasury and federal taxpayers bear foregone revenue. IRS staff and tax advisers must distinguish qualifying threat-based sales, administer elections, resolve the property versus real-property wording, and coordinate basis and section 1033 treatment. Conforming states may lose revenue, and condemning authorities may face stronger compensation demands.
Key Provisions
- Creates a gross-income exclusion for eminent-domain gain.
- Limits coverage to property located in the United States.
- Extends coverage to completed condemnation exercises.
- Expands coverage to sales under threat or imminence of condemnation.
- Replaces section 1033 treatment by default.
- Requires no replacement-property purchase.
- Authorizes taxpayers to elect out.
- Directs Treasury to set election procedures.
- Requires implementing regulations or guidance.
- Extends application to taxable years ending after enactment.
- Provides no income threshold.
- Provides no dollar cap.
- Provides no principal-residence limitation.
- Creates a property versus real-property table mismatch.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
Permanently excludes gain from federal gross income when U.S. property is taken by eminent domain or sold under threat or imminence of condemnation, replaces ordinary section 1033 deferral unless the taxpayer elects out, delegates implementing guidance, and applies to conversions in taxable years ending after enactment.
Key Policy Areas
Federal Income Tax, Eminent Domain, Property Rights, Involuntary Conversions, Condemnation Compensation
Primary Purpose
Permanently excludes gain from federal gross income when U.S. property is taken by eminent domain or sold under threat or imminence of condemnation, replaces ordinary section 1033 deferral unless the taxpayer elects out, delegates implementing guidance, and applies to conversions in taxable years ending after enactment.
Policy Domains
Section 2 gross-income exclusion, threatened or imminent condemnation, section 1033 displacement, taxpayer election, Treasury guidance, table amendment, and effective date
Identified Gains
- Homeowners whose property is condemned
- Farmers whose land is condemned
- Businesses whose property is condemned
- Property owners selling under condemnation threat
- Tax advisers handling condemnation proceeds
Identified Costs
- United States Treasury
- Federal taxpayers financing foregone revenue
- IRS involuntary-conversion staff
- Condemning government authorities
- Owners electing section 1033 treatment
- States conforming to federal gross income
Sponsors
Legislative Progress
In CommitteeReferred to the House Committee on Ways and Means.
Introduced in House
Mr. Cline (for himself, Mr. Fleischmann, Mr. Perry, Mr. Moore …
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
Businesses whose property is condemned, Homeowners whose property is condemned, Owners electing section 1033 treatment
Condemning government authorities, States conforming to federal gross income
IRS involuntary-conversion staff, United States Treasury
Federal taxpayers financing foregone revenue, Taxpayers
Tax advisers handling condemnation proceeds
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "owner"
- → Taxpayer whose U.S. property is condemned or sold under threat
- "state"
- → State conforming to federal income treatment
- "adviser"
- → Tax professional coordinating exclusion and section 1033 treatment
- "secretary"
- → Treasury Secretary prescribing election and implementation rules
- "condemning_authority"
- → Government entity exercising eminent domain
Note: {'scope_ids': ['eminent_domain_gain_exclusion'], 'description': "The bill substitutes permanent exclusion for ordinary section 1033 deferral unless the taxpayer elects out, may reach pre-enactment conversions within a later-ending tax year, and uses broader operative 'property' language than its table entry's 'real property' label."}
Key Definitions
Terms defined in this bill
A Treasury-administered taxpayer choice to make the new section inapplicable to a conversion.
Permanent exclusion of covered gain without the reinvestment condition associated with section 1033.
A conversion of U.S.-located property through eminent domain or a sale or exchange under threat or imminence of its exercise.
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology