A bill to provide emergency disaster assistance to agricultural producers, and for other purposes.

Summary: Emergency Agricultural Disaster Assistance Act of 2004 - Directs the Secretary of Agriculture to provide: (1) emergency financial assistance to agricultural producers who have incurred qualifying 2003 and/or 2004 crop losses due to weather or related conditions; and (2) payments to livestock producers who have incurred 2003 and/or 2004 losses in an emergency-designated county, with set-asides for the American Indian livestock program.

Amends the Internal Revenue Code with respect to involuntary conversion rules to: (1) permit the replacement of livestock with other farm property in the case of drought, flood, or other weather-related conditions (such provision currently applies only to cases of soil or other environmental contamination); and (2) extend the replacement period for livestock sold on account of weather related conditions.

Allows an individual engaged in an eligible farming or commercial fishing business a deduction for any taxable year of up to 20 percent of taxable income attributable to the eligible farming or commercial fishing business paid in cash by the taxpayer to a Farm and Ranch Risk Management Account (FFARRM Account). Includes non-exempt FFARRM distributions in the taxpayer's gross income, and subjects to a special ten percent surtax distributions not made within five years of contribution. Prohibits FFARRM distributions from being used to overcapitalize any fishery. Establishes a tax on excess contributions, but exempts the taxpayer from the tax on certain prohibited transactions.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Emergency Agricultural Disaster 
Assistance Act of 2004''.

                    TITLE I--PROVISION OF ASSISTANCE

SEC. 101. CROP DISASTER ASSISTANCE.

    (a) In General.--Notwithstanding section 508(b)(7) of the Federal 
Crop Insurance Act (7 U.S.C. 1508(b)(7)), the Secretary of Agriculture 
(referred to in this title as the ``Secretary'') shall use such sums as 
are necessary of funds of the Commodity Credit Corporation to make crop 
disaster assistance authorized under this section available to 
producers on a farm that have incurred qualifying crop losses for the 
2003 or 2004 crop, or both, due to damaging weather or related 
condition, as determined by the Secretary.
    (b) Administration.--The Secretary shall make assistance available 
under this section in the same manner as provided under section 815 of 
the Agriculture, Rural Development, Food and Drug Administration, and 
Related Agencies Appropriations Act, 2001 (Public Law 106-387; 114 
Stat. 1549A-55), including using the same loss thresholds for the 
quantity and quality losses as were used in administering that section.

SEC. 102. LIVESTOCK ASSISTANCE PROGRAM.

    (a) In General.--The Secretary shall use such sums as are necessary 
of funds of the Commodity Credit Corporation to make and administer 
payments for livestock losses to producers for 2003 and 2004 losses in 
a county that has received an emergency designation by the President or 
the Secretary after January 1, 2003, and January 1, 2004, respectively, 
of which an amount determined by the Secretary shall be made available 
for the American Indian livestock program under section 806 of the 
Agriculture, Rural Development, Food and Drug Administration, and 
Related Agencies Appropriations Act, 2001 (Public Law 106-387; 114 
Stat. 1549A-51).
    (b) Administration.--The Secretary shall make assistance available 
under this section in the same manner as provided under section 806 of 
the Agriculture, Rural Development, Food and Drug Administration, and 
Related Agencies Appropriations Act, 2001 (Public Law 105-277; 114 
Stat. 1549A-51).

SEC. 103. COMMODITY CREDIT CORPORATION.

    The Secretary shall use the funds, facilities, and authorities of 
the Commodity Credit Corporation to carry out this title.

SEC. 104. REGULATIONS.

    (a) In General.--The Secretary may promulgate such regulations as 
are necessary to implement this title.
    (b) Procedure.--The promulgation of the regulations and 
administration of this title shall be made without regard to--
            (1) the notice and comment provisions of section 553 of 
        title 5, United States Code;
            (2) the Statement of Policy of the Secretary of Agriculture 
        effective July 24, 1971 (36 Fed. Reg. 13804), relating to 
        notices of proposed rulemaking and public participation in 
        rulemaking; and
            (3) chapter 35 of title 44, United States Code (commonly 
        known as the ``Paperwork Reduction Act'').
    (c) Congressional Review of Agency Rulemaking.--In carrying out 
this section, the Secretary shall use the authority provided under 
section 808 of title 5, United States Code.

                          TITLE II--TAX RELIEF

SEC. 201. SPECIAL RULES FOR LIVESTOCK SOLD ON ACCOUNT OF WEATHER-
              RELATED CONDITIONS.

    (a) Replacement of Livestock With Other Farm Property.--Subsection 
(f) of section 1033 of the Internal Revenue Code of 1986 (relating to 
involuntary conversions) is amended--
            (1) by inserting ``drought, flood, or other weather-related 
        conditions, or'' after ``because of'',
            (2) by inserting ``in the case of soil contamination or 
        other environmental contamination'' after ``including real 
        property'', and
            (3) by striking ``Where There Has Been Environmental 
        Contamination'' in the heading and inserting ``in Certain 
        Cases''.
    (b) Extension of Replacement Period of Involuntarily Converted 
Livestock.--Subsection (e) of section 1033 of the Internal Revenue Code 
of 1986 (relating to involuntary conversions) is amended--
            (1) by striking ``Conditions.--For purposes'' and inserting 
        ``Conditions.--
            ``(1) In general.--For purposes'', and
            (2) by adding at the end the following new paragraph:
            ``(2) Extension of replacement period.--
                    ``(A) In general.--In the case of drought, flood, 
                or other weather-related conditions described in 
                paragraph (1) which result in the area being designated 
                as eligible for assistance by the Federal Government, 
                subsection (a)(2)(B) shall be applied with respect to 
                any converted property by substituting `4 years' for `2 
                years'.
                    ``(B) Further extension by secretary.--The 
                Secretary may extend on a regional basis the period for 
                replacement under this section (after the application 
                of subparagraph (A)) for such additional time as the 
                Secretary determines appropriate if the weather-related 
                conditions which resulted in such application continue 
                for more than 3 years.''.
    (c) Income Inclusion Rules.--Section 451(e) of the Internal Revenue 
Code of 1986 (relating to special rule for proceeds from livestock sold 
on account of drought, flood, or other weather-related conditions) is 
amended by adding at the end the following new paragraph:
            ``(3) Special election rules.--If section 1033(e)(2) 
        applies to a sale or exchange of livestock described in 
        paragraph (1), the election under paragraph (1) shall be deemed 
        valid if made during the replacement period described in such 
        section.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 202. FARM, FISHING, AND RANCH RISK MANAGEMENT ACCOUNTS.

    (a) In General.--Subpart C of part II of subchapter E of chapter 1 
of the Internal Revenue Code of 1986 (relating to taxable year for 
which deductions taken) is amended by inserting after section 468B the 
following new section:

``SEC. 468C. FARM, FISHING, AND RANCH RISK MANAGEMENT ACCOUNTS.

    ``(a) Deduction Allowed.--In the case of an individual engaged in 
an eligible farming business or commercial fishing, there shall be 
allowed as a deduction for any taxable year the amount paid in cash by 
the taxpayer during the taxable year to a Farm, Fishing, and Ranch Risk 
Management Account (hereinafter referred to as the `FFARRM Account').
    ``(b) Limitations.--
            ``(1) Contributions.--The amount which a taxpayer may pay 
        into the FFARRM Account for any taxable year shall not exceed 
        20 percent of so much of the taxable income of the taxpayer 
        (determined without regard to this section) which is 
        attributable (determined in the manner applicable under section 
        1301) to any eligible farming business or commercial fishing.
            ``(2) Distributions.--Distributions from a FFARRM Account 
        may not be used to purchase, lease, or finance any new fishing 
        vessel, add capacity to any fishery, or otherwise contribute to 
        the overcapitalization of any fishery. The Secretary of 
        Commerce shall implement regulations to enforce this paragraph.
    ``(c) Eligible Businesses.--For purposes of this section--
            ``(1) Eligible farming business.--The term `eligible 
        farming business' means any farming business (as defined in 
        section 263A(e)(4)) which is not a passive activity (within the 
        meaning of section 469(c)) of the taxpayer.
            ``(2) Commercial fishing.--The term `commercial fishing' 
        has the meaning given such term by section (3) of the Magnuson-
        Stevens Fishery Conservation and Management Act (16 U.S.C. 
        1802) but only if such fishing is not a passive activity 
        (within the meaning of section 469(c)) of the taxpayer.
    ``(d) FFARRM Account.--For purposes of this section--
            ``(1) In general.--The term `FFARRM Account' means a trust 
        created or organized in the United States for the exclusive 
        benefit of the taxpayer, but only if the written governing 
        instrument creating the trust meets the following requirements:
                    ``(A) No contribution will be accepted for any 
                taxable year in excess of the amount allowed as a 
                deduction under subsection (a) for such year.
                    ``(B) The trustee is a bank (as defined in section 
                408(n)) or another person who demonstrates to the 
                satisfaction of the Secretary that the manner in which 
                such person will administer the trust will be 
                consistent with the requirements of this section.
                    ``(C) The assets of the trust consist entirely of 
                cash or of obligations which have adequate stated 
                interest (as defined in section 1274(c)(2)) and which 
                pay such interest not less often than annually.
                    ``(D) All income of the trust is distributed 
                currently to the grantor.
                    ``(E) The assets of the trust will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
            ``(2) Account taxed as grantor trust.--The grantor of a 
        FFARRM Account shall be treated for purposes of this title as 
        the owner of such Account and shall be subject to tax thereon 
        in accordance with subpart E of part I of subchapter J of this 
        chapter (relating to grantors and others treated as substantial 
        owners).
    ``(e) Inclusion of Amounts Distributed.--
            ``(1) In general.--Except as provided in paragraph (2), 
        there shall be includible in the gross income of the taxpayer 
        for any taxable year--
                    ``(A) any amount distributed from a FFARRM Account 
                of the taxpayer during such taxable year, and
                    ``(B) any deemed distribution under--
                            ``(i) subsection (f)(1) (relating to 
                        deposits not distributed within 5 years),
                            ``(ii) subsection (f)(2) (relating to 
                        cessation in eligible farming business), and
                            ``(iii) subparagraph (B) or (C) of 
                        subsection (f)(3) (relating to prohibited 
                        transactions and pledging account as security).
            ``(2) Exceptions.--Paragraph (1)(A) shall not apply to--
                    ``(A) any distribution to the extent attributable 
                to income of the Account, and
                    ``(B) the distribution of any contribution paid 
                during a taxable year to a FFARRM Account to the extent 
                that such contribution exceeds the limitation 
                applicable under subsection (b)(1) if requirements 
                similar to the requirements of section 408(d)(4) are 
                met.
        For purposes of subparagraph (A), distributions shall be 
        treated as first attributable to income and then to other 
        amounts.
    ``(f) Special Rules.--
            ``(1) Tax on deposits in account which are not distributed 
        within 5 years.--
                    ``(A) In general.--If, at the close of any taxable 
                year, there is a nonqualified balance in any FFARRM 
                Account--
                            ``(i) there shall be deemed distributed 
                        from such Account during such taxable year an 
                        amount equal to such balance, and
                            ``(ii) the taxpayer's tax imposed by this 
                        chapter for such taxable year shall be 
                        increased by 10 percent of such deemed 
                        distribution.
                The preceding sentence shall not apply if an amount 
                equal to such nonqualified balance is distributed from 
                such Account to the taxpayer before the due date 
                (including extensions) for filing the return of tax 
                imposed by this chapter for such year (or, if earlier, 
                the date the taxpayer files such return for such year).
                    ``(B) Nonqualified balance.--For purposes of 
                subparagraph (A), the term `nonqualified balance' means 
                any balance in the Account on the last day of the 
                taxable year which is attributable to amounts deposited 
                in such Account before the 4th preceding taxable year.
                    ``(C) Ordering rule.--For purposes of this 
                paragraph, distributions from a FFARRM Account (other 
                than distributions of current income) shall be treated 
                as made from deposits in the order in which such 
                deposits were made, beginning with the earliest 
                deposits.
            ``(2) Cessation in eligible business.--At the close of the 
        first disqualification period after a period for which the 
        taxpayer was engaged in an eligible farming business or 
        commercial fishing, there shall be deemed distributed from the 
        FFARRM Account of the taxpayer an amount equal to the balance 
        in such Account (if any) at the close of such disqualification 
        period. For purposes of the preceding sentence, the term 
        `disqualification period' means any period of 2 consecutive 
        taxable years for which the taxpayer is not engaged in an 
        eligible farming business or commercial fishing.
            ``(3) Certain rules to apply.--Rules similar to the 
        following rules shall apply for purposes of this section:
                    ``(A) Section 220(f)(8) (relating to treatment 
                after death of account holder).
                    ``(B) Section 408(e)(2) (relating to loss of 
                exemption of account where individual engages in 
                prohibited transaction).
                    ``(C) Section 408(e)(4) (relating to effect of 
                pledging account as security).
                    ``(D) Section 408(g) (relating to community 
                property laws).
                    ``(E) Section 408(h) (relating to custodial 
                accounts).
            ``(4) Time when payments deemed made.--For purposes of this 
        section, a taxpayer shall be deemed to have made a payment to a 
        FFARRM Account on the last day of a taxable year if such 
        payment is made on account of such taxable year and is made on 
        or before the due date (without regard to extensions) for 
        filing the return of tax for such taxable year.
            ``(5) Individual.--For purposes of this section, the term 
        `individual' shall not include an estate or trust.
            ``(6) Deduction not allowed for self-employment tax.--The 
        deduction allowable by reason of subsection (a) shall not be 
        taken into account in determining an individual's net earnings 
        from self-employment (within the meaning of section 1402(a)) 
        for purposes of chapter 2.
    ``(g) Reports.--The trustee of a FFARRM Account shall make such 
reports regarding such Account to the Secretary and to the person for 
whose benefit the Account is maintained with respect to contributions, 
distributions, and such other matters as the Secretary may require 
under regulations. The reports required by this subsection shall be 
filed at such time and in such manner and furnished to such persons at 
such time and in such manner as may be required by such regulations.''.
    (b) Tax on Excess Contributions.--
            (1) Subsection (a) of section 4973 of the Internal Revenue 
        Code of 1986 (relating to tax on excess contributions to 
        certain tax-favored accounts and annuities) is amended by 
        striking ``or'' at the end of paragraph (4), by adding ``or'' 
        at the end of paragraph (5), and by inserting after paragraph 
        (5) the following new paragraph:
            ``(6) a FFARRM Account (within the meaning of section 
        468C(d)),''.
            (2) Section 4973 of such Code is amended by adding at the 
        end the following new subsection:
    ``(h) Excess Contributions to FFARRM Accounts.--For purposes of 
this section, in the case of a FFARRM Account (within the meaning of 
section 468C(d)), the term `excess contributions' means the amount by 
which the amount contributed for the taxable year to the Account 
exceeds the amount which may be contributed to the Account under 
section 468C(b)(1) for such taxable year. For purposes of this 
subsection, any contribution which is distributed out of the FFARRM 
Account in a distribution to which section 468C(e)(2)(B) applies shall 
be treated as an amount not contributed.''.
    (c) Tax on Prohibited Transactions.--
            (1) Subsection (c) of section 4975 of the Internal Revenue 
        Code of 1986 (relating to tax on prohibited transactions) is 
        amended by adding at the end the following new paragraph:
            ``(7) Special rule for ffarrm accounts.--A person for whose 
        benefit a FFARRM Account (within the meaning of section 
        468C(d)) is established shall be exempt from the tax imposed by 
        this section with respect to any transaction concerning such 
        account (which would otherwise be taxable under this section) 
        if, with respect to such transaction, the account ceases to be 
        a FFARRM Account by reason of the application of section 
        468C(f)(3)(A) to such account.''.
            (2) Paragraph (1) of section 4975(e) of such Code is 
        amended by redesignating subparagraphs (F) and (G) as 
        subparagraphs (G) and (H), respectively, and by inserting after 
        subparagraph (E) the following new subparagraph:
                    ``(F) a FFARRM Account described in section 
                468C(d),''.
    (d) Failure To Provide Reports on FFARRM Accounts.--Paragraph (2) 
of section 6693(a) of the Internal Revenue Code of 1986 (relating to 
failure to provide reports on certain tax-favored accounts or 
annuities) is amended by redesignating subparagraphs (C) and (D) as 
subparagraphs (D) and (E), respectively, and by inserting after 
subparagraph (B) the following new subparagraph:
                    ``(C) section 468C(g) (relating to FFARRM 
                Accounts),''.
    (e) Clerical Amendment.--The table of sections for subpart C of 
part II of subchapter E of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 468B 
the following new item:

                              ``Sec. 468C. Farm, Fishing and Ranch Risk 
                                        Management Accounts.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.