II 

115TH CONGRESS 

1ST SESSION S. 1090 

To amend the Internal Revenue Code of 1986 to facilitate water leasing 

and water transfers to promote conservation and efficiency. 

IN THE SENATE OF THE UNITED STATES 

MAY 10, 2017 

Mr. CRAPO (for himself, Mr. BENNET, Mr. RISCH, Mr. GARDNER, and Mr. 

ENZI) introduced the following bill; which was read twice and referred to 

the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to facilitate 

water leasing and water transfers to promote conservation and efficiency. 

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 ‘‘Water and Agriculture 

5 Tax Reform Act of 2017’’. 


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•S 1090 IS

1 SEC. 2. FACILITATE WATER LEASING AND WATER TRANS2 FERS TO PROMOTE CONSERVATION AND EF3 FICIENCY. 

4 (a) IN GENERAL.—Paragraph (12) of section 501(c) 

5 of the Internal Revenue Code of 1986 is amended by add6 ing at the end the following new subparagraph: 

7 ‘‘(I) TREATMENT OF MUTUAL DITCH IRRI8 GATION COMPANIES.— 

9 ‘‘(i) IN GENERAL.—In the case of a 

10 mutual ditch or irrigation company or of a 

11 like organization to a mutual ditch or irri12 gation company, subparagraph (A) shall be 

13 applied without taking into account any in14 come received or accrued— 

15 ‘‘(I) from the sale, lease, or ex16 change of fee or other interests in real 

17 property, including interests in water, 

18 ‘‘(II) from the sale or exchange 

19 of stock in a mutual ditch or irriga20 tion company (or in a like organiza21 tion to a mutual ditch or irrigation 

22 company) or contract rights for the 

23 delivery or use of water, or 

24 ‘‘(III) from the investment of 

25 proceeds from sales, leases, or ex26 changes under subclauses (I) and (II), 


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•S 1090 IS

1 except that any income received under sub2 clause (I), (II), or (III) which is distrib3 uted or expended for expenses (other than 

4 for operations, maintenance, and capital 

5 improvements) of the mutual ditch or irri6 gation company or of the like organization 

7 to a mutual ditch or irrigation company 

8 (as the case may be) shall be treated as 

9 nonmember income in the year in which it 

10 is distributed or expended. For purposes of 

11 the preceding sentence, expenses (other 

12 than for operations, maintenance, and cap13 ital improvements) include expenses for the 

14 construction of conveyances designed to de15 liver water outside of the system of the 

16 mutual ditch or irrigation company or of 

17 the like organization. 

18 ‘‘(ii) TREATMENT OF ORGANIZA19 TIONAL GOVERNANCE.—In the case of a 

20 mutual ditch or irrigation company or of a 

21 like organization to a mutual ditch or irri22 gation company, where State law provides 

23 that such a company or organization may 

24 be organized in a manner that permits vot25 ing on a basis which is pro rata to share 


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•S 1090 IS

1 ownership on corporate governance mat2 ters, subparagraph (A) shall be applied 

3 without taking into account whether its 

4 member shareholders have one vote on cor5 porate governance matters per share held 

6 in the corporation. Nothing in this clause 

7 shall be construed to create any inference 

8 about the requirements of this subsection 

9 for companies or organizations not in10 cluded in this clause.’’. 

11 (b) EFFECTIVE DATE.—The amendment made by 

12 subsection (a) shall apply to taxable years beginning after 

13 the date of the enactment of this Act. 

Æ 


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