Ill STAT. 836 PUBLIC LAW 105-34—AUG. 5, 1997 (A) Any gain resulting from an election under paragraph (1) shall be treated as received or accrued on the date the asset is treated as sold under paragraph (1) and shall be recognized notwithstanding any provision of the Internal Revenue Code of 1986. (B) Any loss resulting from an election under paragraph (1) shall not be allowed for any taxable year. (3) ELECTION.— An election under paragraph (1) shall be made in such manner as the Secretary of the Treasury or his delegate may prescribe and shall specify the assets for which such election is made. Such an election, once made with respect to any asset, shall be irrevocable. (4) READILY TRADABLE STOCK.— For purposes of this subsection, the term "readily tradable stock" means any stock which, as of January 1, 2001, is readily tradable on an established securities market or otherwise. SEC. 312. EXEMPTION FROM TAX FOR GAIN ON SALE OF PRINCIPAL RESIDENCE. (a) IN GENERAL.—Section 121 (relating to one-time exclusion of gain from sale of principal residence by individual who has attained age 55) is amended to read as follows: "SEC. 121. EXCLUSION OF GAIN FROM SALE OF PRINCIPAL RESIDENCE. "(a) EXCLUSION.— Gross income shall not include gain from the sale or exchange of property if, during the 5-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as the taxpayer's principal residence for periods aggregating 2 years or more. "(b) LIMITATIONS.— "(1) IN GENERAL.—The amount of gain excluded from gross income under subsection (a) with respect to any sale or exchange shall not exceed $250,000. "(2) $500,000 LIMITATION FOR CERTAIN JOINT RETURNS.— Paragraph (1) shall be applied by substituting '$500,000' for '$250,000 ' if— "(A) a husband and wife make a joint return for the taxable year of the sale or exchange of the property, "(B) either spouse meets the ownership requirements of subsection (a) with respect to such property, "(C) both spouses meet the use requirements of subsection (a) with respect to such property, and "(D) neither spouse is ineligible for the benefits of subsection (a) with respect to such property by reason of paragraph (3). "(3) APPLICATION TO ONLY i SALE OR EXCHANGE EVERY 2 YEARS.— " (A) IN GENERAL. —Subsection (a) shall not apply to any sale or exchange by the taxpayer if, during the 2- year period ending on the date of such sale or exchange, there was any other sale or exchange by the taxpayer to which subsection (a) applied. "(B) PRE-MAY 7, 1997, SALES NOT TAKEN INTO ACCOUNT.— Subparagraph (A) shall be applied without regard to any sale or exchange before May 7, 1997. "(c) EXCLUSION FOR TAXPAYERS FAILING TO MEET CERTAIN REQUIREMENTS.—
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