I

103D CONGRESS

1ST SESSION H. R. 1460

To amend the Internal Revenue Code of 1986 to provide for the tax treatment

of associations resulting from mergers of certain farm credit associations.

IN THE HOUSE OF REPRESENTATIVES

MARCH 24, 1993

Mr. MCDERMOTT 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

for the tax treatment of associations resulting from

mergers of certain farm credit associations.

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

3 SECTION 1. TAX TREATMENT OF ASSOCIATIONS RESULT4 ING FROM MERGERS OF CERTAIN FARM

5 CREDIT ASSOCIATIONS.

6 (a) IN GENERAL.—Part IV of subchapter F of chap7 ter 1 of the Internal Revenue Code of 1986 (relating to

8 farmers’ cooperatives) is amended by adding after section

9 521 the following new section:
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1 ‘‘SEC. 522. CERTAIN MERGED FARM CREDIT ASSOCIATIONS.

2 ‘‘(a) IN GENERAL.—For purposes of this title, except

3 as otherwise provided in this section, an applicable merged

4 association shall be treated in the same manner as a pro5 duction credit association is treated under section 2.6 of

6 the Farm Credit Act of 1971 (12 U.S.C. 2077).

7 ‘‘(b) TREATMENT OF EXEMPT ITEMS.—

8 ‘‘(1) IN GENERAL.—For purposes of this title,

9 an exempt item shall not be taken into account in

10 computing the tax liability of any applicable merged

11 association.

12 ‘‘(2) EXEMPT ITEM.—For purposes of this sub13 section, the term ‘exempt item’ means any item of

14 income, gain, loss, or deduction which is properly al15 locable to loans described in section 1.7 of the Farm

16 Credit Act of 1971 (12 U.S.C. 2015) which have an

17 initial term of at least 10 years.

18 ‘‘(c) DEFINITIONS.—For purposes of this section—

19 ‘‘(1) APPLICABLE MERGED ASSOCIATION.—The

20 term ‘applicable merged association’ means any as21 sociation resulting from a merger under section 7.8

22 of the Farm Credit Act of 1971 or section 410(e)

23 or 411 of the Agricultural Credit Act of 1987 of 1

24 or more production credit associations and 1 or

25 more Federal land bank associations. Such term in26 cludes any corporation resulting from a subsequent
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1 merger of an association referred to in the preceding

2 sentence with another corporation.

3 ‘‘(2) REFERENCES TO FARM CREDIT ACT OF

4 1971.—Any reference in this section to the Farm

5 Credit Act of 1971 shall be a reference to such sec6 tion as in effect on December 31, 1992.’’

7 (b) CONFORMING AMENDMENTS.—

8 (1) The table of sections for part IV of sub9 chapter F of chapter 1 of such Code is amended by

10 adding at the end thereof the following new item:

‘‘Sec. 522. Certain merged farm credit associations.’’

11 (2)(A) The part heading for such part IV is

12 amended by adding at the end thereof the following:

13 ‘‘; CERTAIN FARM CREDIT ASSOCIATIONS’’.

14 (B) The item relating to part IV in the table

15 of parts for subchapter F of chapter 1 of such Code

16 is amended by inserting ‘‘; certain farm credit asso17 ciations’’ after ‘‘cooperatives’’.

18 (c) EFFECTIVE DATE.—The amendments made by

19 this section shall apply to taxable years ending after the

20 date of the enactment of this Act.

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