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105TH CONGRESS

1ST SESSION H. R. 494

To amend the Internal Revenue Code of 1986 with respect to the treatment

of crops destroyed by casualty.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 21, 1997

Mr. THOMAS introduced the following bill; which was referred to the

Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 with respect

to the treatment of crops destroyed by casualty.

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

3 SECTION 1. TREATMENT OF CROPS DESTROYED BY CAS4 UALTY.

5 (a) GENERAL RULE.—Paragraph (2) of section

6 263A(d) of the Internal Revenue Code of 1986 is amended

7 by redesignating subparagraph (B) as subparagraph (G)

8 and by striking subparagraph (A) and inserting the follow9 ing new subparagraphs:
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1 ‘‘(A) IN GENERAL.—If plants bearing an

2 edible crop for human consumption were lost or

3 damaged (while in the hands of the taxpayer)

4 by reason of freezing temperatures, disease,

5 drought, pests, or casualty and the taxpayer re6 plants plants bearing the same type of crop

7 (whether on the same parcel of land on which

8 such lost or damaged plants were located or any

9 other parcel of land of the same acreage in the

10 United States), this section and section 263

11 shall not apply to—

12 ‘‘(i) the costs of the taxpayer of such

13 replanting (other than special replanting

14 costs),

15 ‘‘(ii) 80 percent of the taxpayer’s spe16 cial replanting costs of such replanting,

17 ‘‘(iii) the costs of the taxpayer to re18 move such plants, and

19 ‘‘(iv) the preproductive costs of the

20 taxpayer of such replanting.

21 ‘‘(B) SPECIAL REPLANTING COSTS.—For

22 purposes of this subsection, the term ‘special

23 replanting costs’ means direct costs incurred

24 for—
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1 ‘‘(i) plants (including qualified addi2 tional plants) and supporting structures,

3 ‘‘(ii) replacing irrigation and drainage

4 systems destroyed during removal of the

5 lost or damaged plants, and

6 ‘‘(iii) land preparation and fumiga7 tion.

8 For purposes of the preceding sentence, the

9 term ‘qualified additional plants’ means plants

10 (other than replacement plants) which bear the

11 same type of crop as the lost or damaged plants

12 referred to in subparagraph (A) and which are

13 planted on the same parcel of land as the re14 placement plants.

15 ‘‘(C) PREPRODUCTIVE COSTS.—For pur16 poses of this subsection, the term ‘preproductive

17 costs’ means costs incurred during the

18 preproductive period which are attributable

19 to—

20 ‘‘(i) the cultivation, maintenance, and

21 development of the replantings,

22 ‘‘(ii) the administration of the activi23 ties referred to in clause (i), and

24 ‘‘(iii) interest on financing such activi25 ties.
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1 Such term shall not include special replanting

2 costs.

3 ‘‘(D) EXCLUSION OF NONREPLACEMENT

4 ASSETS.—In no event shall subparagraph (A)

5 apply to costs incurred for any asset which is

6 not substantially equivalent for commercial pur7 poses to an asset used on the parcel of land on

8 which the lost or damaged plants were located.

9 ‘‘(E) LOSS LIMITATION RULE.—Any costs

10 otherwise eligible for the treatment under sub11 paragraph (A) with respect to any parcel shall

12 be reduced by the deduction (if any) allowed to

13 the taxpayer under section 165 which relates to

14 the most recent prior loss or damage to plants

15 located on such parcel.

16 ‘‘(F) COORDINATION WITH ELECTION

17 UNDER PARAGRAPH (3).—The provisions of this

18 paragraph shall apply notwithstanding that an

19 election is made under paragraph (3).’’

20 (b) CONFORMING AMENDMENT.—Section 165 of

21 such Code is amended by redesignating subsection (m) as

22 subsection (n) and by inserting after subsection (l) the fol23 lowing new subsection:

24 ‘‘(m) LOSSES TO WHICH SECTION 263A(d)(2) DE25 DUCTIONS ARE TAKEN.—No deduction shall be allowed
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1 under this section with respect to any loss for which the

2 costs of replanting are deducted under section

3 263A(d)(2)(A).’’

4 (c) EFFECTIVE DATE.—The amendments in this sec5 tion shall apply to costs incurred after December 31,

6 1996, in taxable years ending after such date.

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