I 

108TH CONGRESS 

2D SESSION H. R. 5114 

To amend the Internal Revenue Code of 1986 to make improvements to 

assist young farmers and ranchers. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 21, 2004 

Mr. KING of Iowa 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 make 

improvements to assist young farmers and ranchers. 

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 ‘‘Agricultural Bond Im5 provement Act of 2004’’. 

6 SEC. 2. EXEMPTION OF AGRICULTURAL BONDS FROM PRI7 VATE ACTIVITY BOND VOLUME LIMITS. 

8 (a) IN GENERAL.—Section 146(g) of the Internal 

9 Revenue Code of 1986 (relating to exception for certain 

10 bonds) is amended by striking ‘‘and’’ at the end of para-
2 

•HR 5114 IH 

1 graph (3), by striking the period at the end of paragraph 

2 (4) and inserting ‘‘, and’’, and by inserting after para3 graph (4) the following new paragraph: 

4 ‘‘(5) any qualified small issue bond described in 

5 section 144(a)(12)(B)(ii).’’. 

6 (b) EFFECTIVE DATE.—The amendments made by 

7 this section shall apply to bonds issued after the date of 

8 the enactment of this Act. 

9 SEC. 3. FARM SERVICE AGENCY GUARANTEES EXEMPTED 

10 FROM FEDERAL GUARANTEE PROHIBITION 

11 ON TAX-EXEMPT BONDS. 

12 (a) IN GENERAL.—Subparagraph (A) of section 

13 149(b)(3) of the Internal Revenue Code of 1986 (relating 

14 to certain insurance programs) is amended by striking 

15 ‘‘or’’ at the end of clause (ii), by striking the period at 

16 the end of clause (iii) and inserting ‘‘, or’’, and by insert17 ing after clause (iii) the following new clause: 

18 ‘‘(iv) any guarantee of a loan under 

19 title III of the Consolidated Farm and 

20 Rural Development Act.’’. 

21 (b) EFFECTIVE DATE.—The amendments made by 

22 this section shall apply to bonds issued after the date of 

23 the enactment of this Act. 
3 

•HR 5114 IH 

1 SEC. 4. INCREASE IN LOAN LIMITS ON AGRICULTURAL 

2 BONDS. 

3 (a) IN GENERAL.—Subparagraph (A) of section 

4 147(c)(2) of the Internal Revenue Code of 1986 (relating 

5 to general rule for exception for first-time farmers) is 

6 amended to read as follows: 

7 ‘‘(A) IN GENERAL.— 

8 ‘‘(i) If the requirements of subpara9 graph (B) are met with respect to any 

10 land, paragraph (1) shall not apply to such 

11 land, and subsection (d) shall not apply to 

12 property to be used thereon for farming 

13 purposes, but only to the extent of expend14 itures (financed with the proceeds of the 

15 issue) not in excess of $450,000. 

16 ‘‘(ii) In the case of any calendar year 

17 after 2004, the $450,000 amount con18 tained in clause (i) shall be increased by an 

19 amount equal to such dollar amount multi20 plied by the inflation percentage deter21 mined under section 305(c) of the Consoli22 dated Farm and Rural Development Act (7 

23 U.S.C. 1925(c)) for the calendar year, de24 termined by substituting ‘calendar year’ 

25 for ‘fiscal year’ each place it appears and 

26 by substituting ‘2003’ for ‘1996’ in para-
4 

•HR 5114 IH 

1 graph (2) thereof. Any increase determined 

2 under this clause shall be rounded to the 

3 nearest multiple of $100.’’. 

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

5 this section shall apply to bonds issued after the date of 

6 the enactment of this Act. 

7 SEC. 5. REPEAL OF DOLLAR AMOUNT IN DEFINITION OF 

8 SUBSTANTIAL FARMLAND. 

9 (a) IN GENERAL.—Subparagraph (E) of section 

10 147(2) of the Internal Revenue Code of 1986 (defining 

11 substantial farmland) is amended to read as follows: 

12 ‘‘(E) SUBSTANTIAL FARMLAND.—For pur13 poses of this paragraph, the term ‘substantial 

14 farmland’ means any parcel of land unless such 

15 parcel is smaller than 30 percent of the average 

16 size of a farm in the county in which such par17 cel is located.’’. 

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

19 this section shall apply to bonds issued after the date of 

20 the enactment of this Act. 

Æ