II

106TH CONGRESS

1ST SESSION S. 30

To provide countercyclical income loss protection to offset extreme losses

resulting from severe economic and weather-related events, and for other

purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 19, 1999

Mr. DASCHLE (for himself, Mr. HARKIN, Mr. JOHNSON, Mr. WELLSTONE, Mr.

KERREY, Mr. BINGAMAN, and Mr. BAUCUS) introduced the following bill;

which was read twice and referred to the Committee on Agriculture, Nutrition, and Forestry

A BILL

To provide countercyclical income loss protection to offset

extreme losses resulting from severe economic and weather-related events, and for other purposes.

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 ‘‘Agricultural Market

5 Failure Protection Act of 1999’’.

6 SEC. 101. MARKETING ASSISTANCE LOANS.

7 (a) IN GENERAL.—Section 132 of the Agricultural

8 Market Transition Act (7 U.S.C. 7232) is amended—
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1 (1) in subsection (a)(1)—

2 (A) by striking ‘‘be—’’ and all that follows

3 through ‘‘(A) not’’ and inserting ‘‘be not’’; and

4 (B) by striking ‘‘; but’’ and all that follows

5 through ‘‘per bushel’’;

6 (2) in subsection (b)(1)—

7 (A) by striking ‘‘be—’’ and all that follows

8 through ‘‘(A) not’’ and inserting ‘‘be not’’; and

9 (B) by striking ‘‘; but’’ and all that follows

10 through ‘‘per bushel’’;

11 (3) in subsection (c)(2), by striking ‘‘or more

12 than $0.5192 per pound’’;

13 (4) in subsection (d)—

14 (A) by striking ‘‘be—’’ and all that follows

15 through ‘‘(1) not’’ and inserting ‘‘be not’’; and

16 (B) by striking ‘‘; but’’ and all that follows

17 through ‘‘per pound’’;

18 (5) by striking subsection (e) and inserting the

19 following:

20 ‘‘(e) RICE.—The loan rate for a marketing assistance

21 loan under section 131 for rice shall be—

22 ‘‘(1) not less than 85 percent of the simple av23 erage price received by producers of rice, as deter24 mined by the Secretary, during the marketing years

25 for the immediately preceding 5 crops of rice, ex-
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1 cluding the year in which the average price was the

2 highest and the year in which the average price was

3 the lowest in the period; but

4 ‘‘(2) not less than $6.50 per hundredweight.’’;

5 and

6 (6) in subsection (f)—

7 (A) in paragraph (1)(B), by striking ‘‘or

8 more than $5.26’’; and

9 (B) in paragraph (2)(B), by striking ‘‘or

10 more than $0.093’’.

11 (b) TERM OF LOAN.—Section 133 of the Agricultural

12 Market Transition Act (7 U.S.C. 7233) is amended by

13 striking subsection (c) and inserting the following:

14 ‘‘(c) EXTENSIONS.—The Secretary may extend the

15 term of a marketing assistance loan for any loan commod16 ity for a period not to exceed 6 months.’’.

17 (c) APPLICATION.—

18 (1) IN GENERAL.—The authority provided by

19 this section applies to the 1999 and subsequent

20 crops of a loan commodity (as defined in section 102

21 of the Agricultural Market Transition Act (7 U.S.C.

22 7202)).

23 (2) LOANS.—This section applies to a market24 ing assistance loan for a loan commodity made

25 under subtitle C of the Agricultural Market Transi-
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1 tion Act (7 U.S.C. 7231 et seq.) for the 1999 crop

2 year before, on, or after the date of enactment of

3 this Act.

4 SEC. 3. NET OPERATING LOSS OF FARMERS.

5 (a) INCREASE IN CARRYBACK YEARS.—Paragraph

6 (1) of section 172(b) of the Internal Revenue Code of

7 1986 (relating to net operating loss carrybacks and

8 carryforwards) is amended by adding at the end the fol9 lowing new subparagraph:

10 ‘‘(G) FARMING LOSSES.—Subparagraph

11 (A)(i) shall be applied by substituting ‘10 years’

12 for ‘2 years’ with respect to the portion of the

13 net operating loss of an eligible taxpayer (as de14 fined in subsection (i)) for any taxable year be15 ginning after December 31, 1997, and ending

16 before January 1, 2000, which is a farming loss

17 (as so defined) with respect to the taxpayer.’’

18 (b) DEFINITIONS AND RULES RELATING TO FARM19 ING LOSSES.—Section 172 of such Code is amended by

20 redesignating subsection (i) as subsection (j) and inserting

21 after subsection (h) the following new subsection:

22 ‘‘(i) DEFINITIONS AND RULES RELATING TO FARM23 ING LOSSES.—For purposes of this section—

24 ‘‘(1) FARMING LOSS.—
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1 ‘‘(A) IN GENERAL.—The term ‘farming

2 loss’ means the lesser of—

3 ‘‘(i) the net operating loss of the tax4 payer for the taxable year, or

5 ‘‘(ii) the net operating loss of the tax6 payer for the taxable year determined by

7 only taking into account items of income

8 and deduction attributable to 1 or more

9 qualified farming businesses of the tax10 payer.

11 ‘‘(B) DOLLAR LIMITATION.—

12 ‘‘(i) IN GENERAL.—The farming loss

13 of a taxpayer for any taxable year shall not

14 exceed $200,000.

15 ‘‘(ii) AGGREGATION RULES.—

16 ‘‘(I) IN GENERAL.—All persons

17 treated as 1 employer under sub18 sections (a) or (b) of section 52 shall

19 be treated as 1 person.

20 ‘‘(II) PASS-THRU ENTITY.—In

21 the case of a partnership, trust, or

22 other pass-thru entity, the limitation

23 shall be applied at both the entity and

24 the owner level.
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1 ‘‘(III) OWNER.—The limitation

2 shall be reduced by the amount of

3 farming loss determined for a cor4 poration for which the taxpayer is a

5 50 percent owner in the taxable year

6 of the corporation ending in the tax7 able year of the taxpayer owner.

8 ‘‘(2) ELIGIBLE TAXPAYER.—

9 ‘‘(A) IN GENERAL.—The term ‘eligible tax10 payer’ means a taxpayer which derives more

11 than 50 percent of its gross income for the 3-

12 year period beginning 2 years prior to the cur13 rent taxable year from qualified farming busi14 nesses.

15 ‘‘(B) QUALIFIED FARMING BUSINESS.—

16 The term ‘qualified farming business’ means a

17 trade or business of farming (within the mean18 ing of section 2032A)—

19 ‘‘(i) with respect to which—

20 ‘‘(I) the taxpayer or a member of

21 the family of the taxpayer materially

22 participates (within the meaning of

23 section 2032A(e)(6)), or

24 ‘‘(II) in the case of a taxpayer

25 other than an individual, a 20 percent
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1 owner of the taxpayer or a member of

2 the owner’s family materially partici3 pates (as so defined), and

4 ‘‘(ii) which does not receive in excess

5 of $7,000,000 from sales in a taxable year.

6 For purposes of clause (i)(II), owners which are

7 members of a single family shall be treated as

8 a single owner.

9 ‘‘(3) OWNER.—

10 ‘‘(A) 20 PERCENT OWNER.—The term ‘20

11 percent owner’ means any person who would be

12 described in section 416(i)(1)(B)(i) if ‘20 per13 cent’ were substituted for ‘5 percent’ each place

14 it appears in such section.

15 ‘‘(B) 50 PERCENT OWNER.—The term ‘50

16 percent owner’ means any person who would be

17 described in section 416(i)(1)(B)(i) if ‘50 per18 cent’ were substituted for ‘5 percent’ each place

19 it appears in such section.

20 ‘‘(4) COORDINATION WITH SUBSECTION

21 (b)(2).—For purposes of applying subsection (b)(2),

22 a farming loss for any taxable year shall be treated

23 as a separate net operating loss for such taxable

24 year to be taken into account after the remaining
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1 portion of the net operating loss for such taxable

2 year.

3 ‘‘(5) ELECTION.—Any taxpayer entitled to a

4 10-year carryback under subsection (b)(1)(G) from

5 any loss year may elect to have the carryback period

6 with respect to such loss year, and any portion of

7 the farming loss for such year, determined without

8 regard to subsection (b)(1)(G). Such election shall

9 be made in such manner as may be prescribed by

10 the Secretary and shall be made by the due date (in11 cluding extensions of time) for filing the taxpayer’s

12 return for the taxable year of the net operating loss.

13 Such election, once made for any taxable year, shall

14 be irrevocable for that taxable year.’’

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