Bill
HR 7687
Excludes from gross income any gain from converting U.S. property due to eminent domain, with an optional election to opt out.
Proposed bill overview
- Title: No Tax on Takings Act
- Purpose: Amend the Internal Revenue Code to exclude from gross income any gain realized from the conversion of property in connection with eminent domain.
- Introduced in the House on February 25, 2026, by Rep. Ben Cline (with several co-sponsors). Referred to the House Committee on Ways and Means.
What the bill would do
- Core provision: Creates new Section 139M (Gain from conversion of property by reason of eminent domain) in Part III of Subchapter B of Chapter 1 of the Internal Revenue Code.
- General rule (new 139M(a)): Gross income shall not include gain from the conversion of property located in the United States as a result of the exercise of eminent domain. This includes gains from the sale or exchange of such property under threat or imminence of eminent domain.
- Coordination with existing rules (139M(b)): Section 1033 (involuntary conversions) would not apply to conversions covered by this section. In other words, the exclusion would supersede or override the tax treatment normally provided under 1033 for involuntary conversions.
- Election to forego the exclusion (139M(c)): Taxpayers would have the option to elect not to claim the exclusion for a given conversion, if they prefer to be taxed under existing rules.
- Regulatory authority (139M(d)): The Secretary of the Treasury would issue regulations or guidance necessary to administer the new provision.
Other structural changes
- Clerical amendment (section 2(b) of the bill): Adds a new item to the table of sections for Part III of Subchapter B, describing “Sec. 139M. Gain from conversion of real property by reason of eminent domain.”
Effective date
- The amendments would apply to conversions in taxable years ending after the date of enactment of the bill.
Who would be affected
- Property owners in the United States who experience an eminent domain action, including cases where the property is bought or otherwise converted under threat or imminence of eminent domain.
- Taxpayers considering whether to incur gains from conversion under imminent domain scenarios, with the option to elect out of the exclusion.
- Taxpayers relying on the current 1033 involuntary conversion framework, which would be superseded for matters covered by 139M.
Potential impacts
- Tax consequences for takings: If the bill becomes law, certain gains from eminent domain-related conversions would be excluded from gross income, reducing or eliminating federal income tax liability on those gains.
- Election flexibility: Taxpayers can choose to opt out if they believe the standard tax treatment under existing provisions would be more favorable in their specific situation.
- Administrative guidance: The Treasury would issue regulations to implement and clarify the new exclusion, including definitions, eligibility, and interaction with other tax rules.
Notes for readers
- The bill focuses specifically on gain realized from the conversion of property due to eminent domain within the United States.
- It does not address other tax aspects of eminent domain, such as compensation payments that may be received, nor does it alter all other provisions related to eminent domain beyond gain recognition under the specific conversion context.
- As introduced, the measure is subject to committee review and potential amendments during the legislative process.
Compiled from official sources — confirm details with the bill’s official record.
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