Exclusion of Gain — Publication 544

If you sold or exchanged a District of Columbia Enterprise Zone (DC Zone) asset acquired after 1997 and before 2012 and held it for more than 5 years, you may be able to exclude the qualified capital gain that you would otherwise include in income.

DC Zone asset. A DC Zone asset is any of the following.

DC Zone business stock.
DC Zone partnership interest.
DC Zone business property.

Qualified capital gain. The qualified capital gain is any gain recognized on the sale or exchange of a DC Zone asset that is a capital asset or property used in a trade or business. It does not include any of the following gains.

Gain treated as ordinary income under section 1245 of the Internal Revenue Code.
Section 1250 gain figured as if section 1250 applied to all depreciation rather than the additional depreciation.
Gain attributable to real property or an intangible asset that is not an integral part of a DC Zone business.
Gain from a related-party transaction. See Sales and Exchanges Between Related Persons in chapter 2.
Gain attributable to periods after December 31, 2016.

See the Instructions for Schedule D and the Instructions for Form 8949 for details on how to report the sale and exclusion. Report the sale or exchange of DC Zone business property on Form 4797. See the Instructions for Form 4797 for details.