I 

109TH CONGRESS 

1ST SESSION H. R. 1825 

To amend the Internal Revenue Code of 1986 to exclude from gross income 

the first $5,000 of transitional payments under the Fair and Equitable 

Tobacco Reform Act of 2004. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 26, 2005 

Mr. BUTTERFIELD 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 exclude 

from gross income the first $5,000 of transitional payments under the Fair and Equitable Tobacco Reform 

Act of 2004. 

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 ‘‘Small Tobacco Farmer 

5 Tax Relief Act of 2005’’. 
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1 SEC. 2. EXCLUSION OF PORTION OF TRANSITIONAL PAY2 MENTS UNDER FAIR AND EQUITABLE TO3 BACCO REFORM ACT OF 2004. 

4 (a) GENERAL RULE.—Part III of subchapter B of 

5 chapter 1 of the Internal Revenue Code of 1986 (relating 

6 to items specifically excluded from gross income) is 

7 amended by inserting after section 139A the following new 

8 section: 

9 ‘‘SEC. 139B. TRANSITIONAL PAYMENTS UNDER FAIR AND 

10 EQUITABLE TOBACCO REFORM ACT OF 2004. 

11 ‘‘(a) GENERAL RULE.—Gross income shall not in12 clude any qualified tobacco payment. 

13 ‘‘(b) LIMITATIONS.— 

14 ‘‘(1) ANNUAL LIMITATION.—Except as provided 

15 by paragraph (2), the amount excluded from gross 

16 income under subsection (a) for a taxable year shall 

17 not exceed $5,000. 

18 ‘‘(2) ASSIGNMENT OF CONTRACT PAYMENTS TO

19 FINANCIAL INSTITUTION.—In the case of an assign20 ment to a financial institution of the right to receive 

21 contract payments under section 624(e) of the Fair 

22 and Equitable Tobacco Reform Act of 2004 (7 

23 U.S.C. 518c(e)), the amount excluded from gross in24 come under subsection (a) for a taxable year shall 

25 not exceed the lesser of— 
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1 ‘‘(A) the consideration received under such 

2 assignment reduced by the aggregate amount 

3 excluded under this section for all previous tax4 able years, and 

5 ‘‘(B) $50,000. 

6 ‘‘(3) AGGREGATE AMOUNT EXCLUDED.—The 

7 aggregate amount excluded from gross income under 

8 this section with respect to any producer of quota 

9 tobacco and any tobacco quota holder shall not ex10 ceed $50,000. 

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

12 ‘‘(1) QUALIFIED TOBACCO PAYMENT.— 

13 ‘‘(A) IN GENERAL.—For purposes of sub14 section (a), the term ‘qualified tobacco pay15 ment’ means any payment under section 622 or 

16 623 of the Fair and Equitable Tobacco Reform 

17 Act of 2004 (7 U.S.C. 518a and 518b). 

18 ‘‘(B) EXCEPTION.—Such term does not in19 clude any payment under section 624(e) of the 

20 Fair and Equitable Tobacco Reform Act of 

21 2004 (7 U.S.C. 518c(e)) pursuant to an assign22 ment to a financial institution of the right to 

23 receive contract payments under such Act. 

24 ‘‘(2) PRODUCER OF QUOTA TOBACCO; TOBACCO

25 QUOTA HOLDER.—The terms ‘producer of quota to-
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1 bacco’ and ‘tobacco quota holder’ have the meanings 

2 given such terms by section 621 of the Fair and Eq3 uitable Tobacco Reform Act of 2004 (7 U.S.C. 518). 

4 ‘‘(d) TERMINATION.—This section shall not apply to 

5 taxable years beginning after December 31, 2014.’’. 

6 (b) CLERICAL AMENDMENT.—The table of sections 

7 for such part is amended by inserting after the item relat8 ing to section 139A the following new item: 

‘‘Sec. 139B. Transitional payments under Fair and Equitable Tobacco Reform 

Act of 2004.’’. 

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

10 this section shall apply to payments received December 31, 

11 2004. 

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