# 26 U.S.C. § 1035: Certain exchanges of insurance policies

Source: OLRC release point 119-134 <https://uscode.house.gov/us/usc/119-134/t26/s1035>. Cite pinpoints as 26 U.S.C. § 1035(a)(1).

## § 1035(a) General rules

No gain or loss shall be recognized on the exchange of—

**§ 1035(a)(1)** a contract of life insurance for another contract of life insurance or for an endowment or annuity contract or for a qualified long-term care insurance contract;

**§ 1035(a)(2)** a contract of endowment insurance (A) for another contract of endowment insurance which provides for regular payments beginning at a date not later than the date payments would have begun under the contract exchanged, or (B) for an annuity contract, or (C) for a qualified long-term care insurance contract;

**§ 1035(a)(3)** an annuity contract for an annuity contract or for a qualified long-term care insurance contract; or

**§ 1035(a)(4)** a qualified long-term care insurance contract for a qualified long-term care insurance contract.

## § 1035(b) Definitions

For the purpose of this section—

**§ 1035(b)(1) Endowment contract.** A contract of endowment insurance is a contract with an insurance company which depends in part on the life expectancy of the insured, but which may be payable in full in a single payment during his life.

**§ 1035(b)(2) Annuity contract.** An annuity contract is a contract to which paragraph (1) applies but which may be payable during the life of the annuitant only in installments. For purposes of the preceding sentence, a contract shall not fail to be treated as an annuity contract solely because a qualified long-term care insurance contract is a part of or a rider on such contract.

**§ 1035(b)(3) Life insurance contract.** A contract of life insurance is a contract to which paragraph (1) applies but which is not ordinarily payable in full during the life of the insured. For purposes of the preceding sentence, a contract shall not fail to be treated as a life insurance contract solely because a qualified long-term care insurance contract is a part of or a rider on such contract.

## § 1035(c) Exchanges involving foreign persons

To the extent provided in regulations, subsection (a) shall not apply to any exchange having the effect of transferring property to any person other than a United States person.

## § 1035(d) Cross references

**§ 1035(d)(1)** For rules relating to recognition of gain or loss where an exchange is not solely in kind, see subsections (b) and (c) of section 1031.

**§ 1035(d)(2)** For rules relating to the basis of property acquired in an exchange described in subsection (a), see subsection (d) of section 1031.

## Regulations

- [Treas. Reg. § 1.1035-1](/26/reg/1.1035-1.md): Certain exchanges of insurance policies. (interprets § 1035)

## Leading cases

- [Greene v. Commissioner, 85 T.C. 1024 (1985)](https://www.courtlistener.com/opinion/4706145/greene-v-commissioner/)
- [Conway v. Commissioner, 111 T.C. 350 (1998)](https://www.courtlistener.com/opinion/4695568/conway-v-commissioner/)

## Connections

Cites: § 1031 Exchange of real property held for productive use or investment

Cited by: § 72 Annuities; certain proceeds of endowment and life insurance contracts; § 1031 Exchange of real property held for productive use or investment

## Amendments

- 1954-08-16: [Act Aug. 16, 1954, ch. 736](/26/act/1954-ch736.md), 68A Stat. 309
- 1984-07-18: [Pub. L. 98-369](/26/act/98-369.md), 98 Stat. 756
- 1986-10-22: [Pub. L. 99-514](/26/act/99-514.md), 100 Stat. 2851
- 1997-08-05: [Pub. L. 105-34](/26/act/105-34.md), 111 Stat. 979
- 2006-08-17: [Pub. L. 109-280](/26/act/109-280.md), 120 Stat. 1010
- 2018-03-23: [Pub. L. 115-141](/26/act/115-141.md), 132 Stat. 1192