26 U.S.C. § 1001 — Determination of amount of and recognition of gain or loss

(a) Gain is the amount realized from selling or otherwise disposing of property minus the property’s adjusted basis used to determine gain under section 1011. Loss is that adjusted basis used to determine loss minus the amount realized. (b) The amount realized is money received plus the fair market value of other property received. Do not count a reimbursement of real-property taxes treated under section 164(d) as imposed on the buyer. Do count real-property taxes treated that way as imposed on the taxpayer when the buyer must pay them. (c) Unless this subtitle provides otherwise, the full gain or loss calculated under this section is recognized. (d) For property sold under an installment-payment contract, this section does not prevent taxing the gain portion of each installment in the year that payment is received. (e)(1) When calculating gain or loss from disposing of a term interest in property, disregard the part of the interest’s adjusted basis that comes from section 1014, 1015, or 1041, to the extent that basis is part of the property’s total adjusted basis. (2) “Term interest in property” means a life interest, an interest for a term of years, or an income interest in a trust. (3) Paragraph (1) does not apply when the transaction transfers the entire property interest to one or more persons.