II 

113TH CONGRESS 

1ST SESSION S. 1441 

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 

AUGUST 1, 2013 

Mr. BENNET (for himself and Mr. CRAPO) 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 2013’’. 


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•S 1441 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 like 

11 organization, subparagraph (A) shall be 

12 applied without taking into account any in13 come received or accrued— 

14 ‘‘(I) from the sale, lease, or ex15 change of fee or other interests in real 

16 property, including interests in water, 

17 ‘‘(II) from the sale or exchange 

18 of stock in a mutual ditch or irriga19 tion company or like organization or 

20 contract rights for the delivery or use 

21 of water, or 

22 ‘‘(III) from the investment of 

23 proceeds from sales, leases, or ex24 changes under subclauses (I) and (II), 

25 except that any income received under sub26 clause (I), (II), or (III) which is distribVerDate Mar 15 2010 00:17 Aug 08, 2013 Jkt 029200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1441.IS S1441

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•S 1441 IS

1 uted or expended for expenses (other than 

2 for operations, maintenance, and capital 

3 improvements) of the mutual ditch or irri4 gation company or like organization shall 

5 be treated as nonmember income in the 

6 year in which it is distributed or expended. 

7 For purposes of the preceding sentence, 

8 expenses (other than for operations, main9 tenance, and capital improvements) include 

10 expenses for the construction of convey11 ances designed to deliver water outside of 

12 the mutual ditch or irrigation company or 

13 like organization system. 

14 ‘‘(ii) TREATMENT OF ORGANIZA15 TIONAL GOVERNANCE.—In the case of a 

16 mutual ditch or irrigation company or like 

17 organization, where State law provides that 

18 such a company or organization may be or19 ganized in a manner that permits voting 

20 on a basis which is pro rata to share own21 ership on corporate governance matters, 

22 subparagraph (A) shall be applied without 

23 taking into account whether its member 

24 shareholders have one vote on corporate 

25 governance matters per share held in the 


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•S 1441 IS

1 corporation. Nothing in this clause shall be 

2 construed to create any inference about the 

3 requirements of this subsection for compa4 nies or organizations not included in this 

5 clause.’’. 

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

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

8 the date of the enactment of this Act. 

Æ 


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