Ill STAT. 842 PUBLIC LAW 105-34—AUG. 5, 1997 This section shall not apply to any gain which is treated as ordinary income for purposes of this title. "(b) DEFINITIONS AND SPECIAL RULES. —For purposes of this section— "(1) QUALIFIED SMALL BUSINESS STOCK.— The term 'qualified small business stock' has the meaning given such term by section 1202(c). "(2) PURCHASE. —^A taxpayer shall be treated as having purchased any property if, but for paragraph (3), the unadjusted basis of such property in the hands of the taxpayer would be its cost (within the meaning of section 1012). "(3) BASIS ADJUSTMENTS. —I f gain from any sale is not recognized by reason of subsection (a), such gain shall be applied to reduce (in the order acquired) the basis for determining gain or loss of any qualified small business stock which is purchased by the taxpayer during the 60-day period described in subsection (a). "(4) HOLDING PERIOD.— For purposes of determining whether the nonrecognition of gain under subsection (a) applies to stock which is sold— "(A) the taxpayer's holding period for such stock and the stock referred to in subsection (a)(1) shall be determined without regard to section 1223, and "(B) only the first 6 months of the taxpayer's holding Eeriod for the stock referred to in subsection (a)(1) shall e taken into account for purposes of applying section 1202(c)(2). ". (b) CONFORMING AMENDMENTS.— (1) Section 1016(a)(23) is amended— (A) by striking "or 1044" and inserting ", 1044, or 1045", and (B) by striking "or 1044(d)" and inserting ", 1044(d), or 1045(b)(4)". (2) Section 1223 is amended by redesignating paragraph (15) as paragraph (16) and by inserting after paragraph (14) the following new paragraph: "(15) In determining the period for which the taxpayer has held property the acquisition of which resulted under section 1045 in the nonrecognition of any part of the gain realized on the sale of other property, there shall be included the period for which such other property has been held as of the date of such sale.". (3) The table of sections for part III of subchapter O of chapter 1 is amended by adding at the end the following new item: "Sec. 1045. Rollover of gain from qualified small business stock to another qualified small business stock.". 26 USC 1016 (c) EFFECTIVE DATE. —The amendments made by this section note. shall apply to sales after the date of enactment of this Act. SEC. 314. AMOUNT OF NET CAPITAL GAIN TAKEN INTO ACCOUNT IN COMPUTING ALTERNATIVE TAX ON CAPITAL GAINS FOR CORPORATIONS NOT TO EXCEED TAXABLE INCOME OF THE CORPORATION. (a) IN GENERAL. —Paragraph (2) of section 1201(a) is amended by inserting before the period "(or, if less, taxable income)".