I 

115TH CONGRESS 

1ST SESSION H. R. 519 

To amend the Internal Revenue Code of 1986 to facilitate water leasing 

and water transfers to promote conservation and efficiency. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 13, 2017 

Mr. BUCK (for himself, Mr. GOSAR, Mr. TIPTON, Mrs. LOVE, and Mr. BISHOP

of Utah) 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 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 2017’’. 


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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 of a 

11 like organization to a mutual ditch or irri12 gation company, subparagraph (A) shall be 

13 applied without taking into account any in14 come received or accrued— 

15 ‘‘(I) from the sale, lease, or ex16 change of fee or other interests in real 

17 and personal property, including inter18 ests in water, 

19 ‘‘(II) from the sale or exchange 

20 of stock in a mutual ditch or irriga21 tion company (or in a like organiza22 tion to a mutual ditch or irrigation 

23 company) or contract rights for the 

24 delivery or use of water, or 


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1 ‘‘(III) from the investment of 

2 proceeds from sales, leases, or ex3 changes under subclauses (I) and (II), 

4 except that any income received under sub5 clause (I), (II), or (III) which is distrib6 uted or expended for expenses (other than 

7 for operations, maintenance, and capital 

8 improvements) of the mutual ditch or irri9 gation company or of the like organization 

10 to a mutual ditch or irrigation company 

11 (as the case may be) shall be treated as 

12 nonmember income in the year in which it 

13 is distributed or expended. For purposes of 

14 the preceding sentence, expenses (other 

15 than for operations, maintenance, and cap16 ital improvements) include expenses for the 

17 construction of conveyances designed to de18 liver water outside of the system of the 

19 mutual ditch or irrigation company or of 

20 the like organization. 

21 ‘‘(ii) TREATMENT OF ORGANIZA22 TIONAL GOVERNANCE.—In the case of a 

23 mutual ditch or irrigation company or of a 

24 like organization to a mutual ditch or irri25 gation company, where State law provides 


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1 that such a company or organization may 

2 be organized in a manner that permits vot3 ing on a basis which is pro rata to share 

4 ownership on corporate governance mat5 ters, subparagraph (A) shall be applied 

6 without taking into account whether its 

7 member shareholders have one vote on cor8 porate governance matters per share held 

9 in the corporation. Nothing in this clause 

10 shall be construed to create any inference 

11 about the requirements of this subsection 

12 for companies or organizations not in13 cluded in this clause.’’. 

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

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

16 the date of the enactment of this Act. 

Æ 


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