I

104TH CONGRESS

1ST SESSION H. R. 441

To amend the Internal Revenue Code of 1986 to provide a one-time exclusion

of gain from the sale of farmland to a beginning farmer.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 9, 1995

Mr. LIGHTFOOT 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

a one-time exclusion of gain from the sale of farmland

to a beginning farmer.

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

3 SECTION 1. ONE-TIME EXCLUSION OF GAIN FROM SALE OF

4 FARMLAND TO BEGINNING FARMER.

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 inserting after section 121 the following new section:
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1 ‘‘SEC. 121A. ONE-TIME EXCLUSION OF GAIN FROM SALE OF

2 FARMLAND TO BEGINNING FARMER.

3 ‘‘(a) GENERAL RULE.—In the case of an individual,

4 at the election of the taxpayer, gross income does not in5 clude gain from the sale or exchange of property if—

6 ‘‘(1) the taxpayer has attained the age of 55

7 before the date of such sale or exchange,

8 ‘‘(2) during the 8-year period ending on the

9 date of the sale or exchange, such property—

10 ‘‘(A) was owned by the taxpayer, and

11 ‘‘(B) was used by any person as a farm for

12 farming purposes (as defined in section

13 2032A(e)), and

14 ‘‘(3) such property is acquired from the tax15 payer by a beginning farmer.

16 The requirement of paragraph (2)(B) shall be treated as

17 met only if, for periods aggregating 3 years or more dur18 ing such 8-year period, such use was by the taxpayer.

19 ‘‘(b) APPLICATION TO ONLY 1 SALE OR EX20 CHANGE.—Subsection (a) shall not apply to any sale or

21 exchange by the taxpayer if an election by the taxpayer

22 or his spouse under subsection (a) or section 121 with re23 spect to any other sale or exchange is in effect. The pre24 ceding sentence shall be applied by not taking into account

25 any election referred to in section 121(b)(3) and any elec26 tion under section 121 with respect to the principal resi-
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1 dence of the taxpayer which is acquired by the beginning

2 farmer who acquired the property referred to in subsection

3 (a).

4 ‘‘(c) ELECTION.—An election under subsection (a)

5 may be made or revoked at any time before the expiration

6 of the period for making a claim for credit or refund of

7 the tax imposed by this chapter for the taxable year in

8 which the sale or exchange occurred, and shall be made

9 or revoked in such manner as the Secretary shall by regu10 lations prescribe. In the case of a taxpayer who is married,

11 an election under subsection (a) or a revocation thereof

12 may be made only if his spouse joins in such election or

13 revocation.

14 ‘‘(d) BEGINNING FARMER.—For purposes of this sec15 tion, the term ‘beginning farmer’ means any qualified be16 ginning farmer or rancher, as defined by section

17 343(a)(11) of the Consolidated Farm and Rural Develop18 ment Act (7 U.S.C. 1991).

19 ‘‘(e) SPECIAL RULES.—Rules similar to the rules of

20 paragraphs (1), (2), and (6) of section 121(d) shall apply

21 for purposes of this section.’’

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

23 for such part III is amended by inserting after the item

24 relating to section 121 the following new item:

‘‘Sec. 121A. One-time exclusion of gain from sale of farmland to

beginning farmer.’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to sales and exchanges after the

3 date of the enactment of this Act in taxable years ending

4 after such date.

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