72-16-349. Treatment of replacement property acquired in transactions under section 1031 or 1033 of the Internal Revenue Code. (1) Except as provided in subsection (2) in the case of any qualified replacement property, any period during which there was ownership, qualified use, or material participation with respect to the replaced property by the decedent or any member of his family must be treated as a period during which there was such ownership, use, or material participation with respect to the qualified replacement property.
     (2) Subsection (1) does not apply to the extent that the fair market value of the qualified replacement property, as of the date of its acquisition, exceeds the fair market value of the replaced property, as of the date of its disposition.
     (3) For purposes of this section:
     (a) the term "qualified replacement property" means any real property:
     (i) that is acquired in an exchange which qualifies under section 1031 of the Internal Revenue Code;
     (ii) the acquisition of which results in the nonrecognition of gain under section 1033 of the Internal Revenue Code; or
     (iii) that is used for the same qualified use as the replaced property was being used before the exchange;
     (b) the term "replaced property" means:
     (i) the property transferred in the exchange that qualifies under section 1031 of the Internal Revenue Code; or
     (ii) the property compulsorily or involuntarily converted within the meaning of section 1033 of the Internal Revenue Code.

     History: En. Sec. 23, Ch. 511, L. 1983.