I

106TH CONGRESS

1ST SESSION H. R. 1503

To amend the Internal Revenue Code of 1986 to provide an exclusion for

gain from the sale of farmland which is similar to the exclusion from

gain on the sale of a principal residence.

IN THE HOUSE OF REPRESENTATIVES

APRIL 21, 1999

Mr. BARRETT of Nebraska (for himself and Mr. POMEROY) 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

an exclusion for gain from the sale of farmland which

is similar to the exclusion from gain on the sale of

a principal residence.

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

3 SECTION 1. EXCLUSION OF GAIN FROM SALE OF CERTAIN

4 FARMLAND.

5 (a) IN GENERAL.—Part III of subchapter B of chap6 ter 1 of the Internal Revenue Code of 1986 (relating to

7 items specifically excluded from gross income) is amended

8 by adding after section 121 the following new section:
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1 ‘‘SEC. 121A. EXCLUSION OF GAIN FROM SALE OF QUALIFIED

2 FARM PROPERTY.

3 ‘‘(a) EXCLUSION.—In the case of a natural person,

4 gross income shall not include gain from the sale or ex5 change of qualified farm property.

6 ‘‘(b) LIMITATION ON AMOUNT OF EXCLUSION.—

7 ‘‘(1) IN GENERAL.—The amount of gain ex8 cluded from gross income under subsection (a) with

9 respect to any taxable year shall not exceed

10 $500,000 ($250,000 in the case of a married indi11 vidual filing a separate return), reduced by the ag12 gregate amount of gain excluded under subsection

13 (a) for all preceding taxable years.

14 ‘‘(2) SPECIAL RULE FOR JOINT RETURNS.—The

15 amount of the exclusion under subsection (a) on a

16 joint return for any taxable year shall be allocated

17 equally between the spouses for purposes of applying

18 the limitation under paragraph (1) for any suc19 ceeding taxable year.

20 ‘‘(c) QUALIFIED FARM PROPERTY.—For purposes of

21 this section—

22 ‘‘(1) IN GENERAL.—The term ‘qualified farm

23 property’ means real property located in the United

24 States if, during periods aggregating 3 years or

25 more of the 5-year period ending on the date of the

26 sale or exchange of such real property—
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1 ‘‘(A) such real property was used by the

2 taxpayer or a member of the family of the tax3 payer as a farm for farming purposes, and

4 ‘‘(B) there was material participation by

5 the taxpayer (or such a member) in the oper6 ation of the farm.

7 ‘‘(2) OTHER DEFINITIONS.—The terms ‘mem8 ber of the family’, ‘farm’, and ‘farming purposes’

9 have the respective meanings given such terms by

10 paragraphs (2), (4), and (5) of section 2032A(e).

11 ‘‘(3) SPECIAL RULES.—Rules similar to the

12 rules of paragraphs (4) and (5) of section 2032A(b)

13 and paragraphs (3) and (6) of section 2032A(e)

14 shall apply.

15 ‘‘(d) OTHER RULES.—For purposes of this section,

16 rules similar to the rules of subsection (e) and subsection

17 (f) of section 121 shall apply.’’

18 (b) CONFORMING AMENDMENT.—The table of sec19 tions for part III of subchapter B of chapter 1 of the In20 ternal Revenue Code of 1986 is amended by adding after

21 the item relating to section 121 the following new item:

‘‘Sec. 121A. Exclusion of gain from sale of qualified farm property.’’
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1 (c) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to any sale or exchange on or after

3 May 7, 1997, in taxable years ending after such date.

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