I 

108TH CONGRESS 

1ST SESSION H. R. 310

To amend the Internal Revenue Code of 1986 to provide an exclusion for 

gain from the sale of farmland which is similar to the exclusion from 

gain on the sale of a principal residence. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 8, 2003

Mr. OSBORNE (for himself, Mr. BEREUTER, Mr. POMEROY, Mr. PAUL, Mr. 

NETHERCUTT, Mr. FLAKE, Mr. WAMP, Mr. KENNEDY of Minnesota, Mr. 

WHITFIELD, Mr. GREEN of Wisconsin, Mr. WILSON of South Carolina, 

Mr. FROST, Mr. SMITH of Michigan, Mrs. EMERSON, Mr. REHBERG, Mr. 

LEWIS of Kentucky, and Mr. SOUDER) introduced the following bill; 

which was referred to the Committee on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to provide 

an exclusion for gain from the sale of farmland which 

is similar to the exclusion from gain on the sale of 

a principal residence.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Farmland Capital 

5 Gains Equity Act of 2003’’. 
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1 SEC. 2. EXCLUSION OF GAIN FROM SALE OF CERTAIN 

2 FARMLAND. 

3 (a) IN GENERAL.—Part III of subchapter B of chap4 ter 1 of the Internal Revenue Code of 1986 (relating to 

5 items specifically excluded from gross income) is amended 

6 by adding after section 121 the following new section: 

7 ‘‘SEC. 121A. EXCLUSION OF GAIN FROM SALE OF QUALIFIED 

8 FARM PROPERTY. 

9 ‘‘(a) EXCLUSION.—In the case of a natural person, 

10 gross income shall not include gain from the sale or ex11 change of qualified farm property. 

12 ‘‘(b) LIMITATION ON AMOUNT OF EXCLUSION.—

13 ‘‘(1) IN GENERAL.—The amount of gain ex14 cluded from gross income under subsection (a) with 

15 respect to any taxable year shall not exceed 

16 $500,000 ($250,000 in the case of a married indi17 vidual filing a separate return), reduced by the ag18 gregate amount of gain excluded under subsection 

19 (a) for all preceding taxable years. 

20 ‘‘(2) SPECIAL RULE FOR JOINT RETURNS.—The 

21 amount of the exclusion under subsection (a) on a 

22 joint return for any taxable year shall be allocated 

23 equally between the spouses for purposes of applying 

24 the limitation under paragraph (1) for any suc25 ceeding taxable year. 
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1 ‘‘(c) QUALIFIED FARM PROPERTY.—For purposes of 

2 this section—

3 ‘‘(1) IN GENERAL.—The term ‘qualified farm 

4 property’ means real property located in the United 

5 States if, during periods aggregating 3 years or 

6 more of the 5-year period ending on the date of the 

7 sale or exchange of such real property—

8 ‘‘(A) such real property was used by the 

9 taxpayer or a member of the family of the tax10 payer as a farm for farming purposes, and 

11 ‘‘(B) there was material participation by 

12 the taxpayer (or such a member) in the oper13 ation of the farm. 

14 ‘‘(2) OTHER DEFINITIONS.—The terms ‘mem15 ber of the family’, ‘farm’, and ‘farming purposes’ 

16 have the respective meanings given such terms by 

17 paragraphs (2), (4), and (5) of section 2032A(e). 

18 ‘‘(3) SPECIAL RULES.—Rules similar to the 

19 rules of paragraphs (4) and (5) of section 2032A(b) 

20 and paragraphs (3) and (6) of section 2032A(e) 

21 shall apply. 

22 ‘‘(d) OTHER RULES.—For purposes of this section, 

23 rules similar to the rules of subsection (e) and subsection 

24 (f) of section 121 shall apply.’’
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1 (b) CONFORMING AMENDMENT.—The table of sec2 tions for part III of subchapter B of chapter 1 of the In3 ternal Revenue Code of 1986 is amended by adding after 

4 the item relating to section 121 the following new item:

‘‘Sec. 121A. Exclusion of gain from sale of qualified farm property.’’

5 (c) EFFECTIVE DATE.—The amendment made by 

6 this section shall apply to any sale or exchange on or after 

7 May 7, 1997, in taxable years ending after such date.

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