I

103D CONGRESS

1ST SESSION H. R. 1747

To amend the Internal Revenue Code of 1986 to provide for rollover of

gain from sale of farm assets into an individual retirement account.

IN THE HOUSE OF REPRESENTATIVES

APRIL 20, 1993

Mr. SENSENBRENNER 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

for rollover of gain from sale of farm assets into an

individual retirement account.

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; REFERENCE TO INTERNAL REV4 ENUE CODE.

5 (a) SHORT TITLE.—This Act may be cited as the

6 ‘‘Family Farm Tax Relief and Savings Act of 1993’’.

7 (b) REFERENCE TO INTERNAL REVENUE CODE OF

8 1986.—Except as otherwise expressly provided, whenever

9 in this Act an amendment or repeal is expressed in terms

10 of an amendment to, or repeal of, a section or other provi-
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1 sion, the reference shall be considered to be made to a

2 section or other provision of the Internal Revenue Code

3 of 1986.

4 SEC. 2. ROLLOVER OF GAIN FROM SALE OF FARM ASSETS

5 TO INDIVIDUAL RETIREMENT PLANS.

6 (a) IN GENERAL.—Part III of subchapter O of chap7 ter 1 of the Internal Revenue Code of 1986 (relating to

8 common nontaxable exchanges) is amended by inserting

9 after section 1034 the following new section:

10 ‘‘SEC. 1034A. ROLLOVER OF GAIN ON SALE OF FARM ASSETS

11 INTO ASSET ROLLOVER ACCOUNT.

12 ‘‘(a) NONRECOGNITION OF GAIN.—If a taxpayer has

13 a qualified net farm gain from the sale of a qualified farm

14 asset, then, at the election of the taxpayer, gain (if any)

15 from such sale shall be recognized only to the extent such

16 gain exceeds the contributions which—

17 ‘‘(1) are to 1 or more asset rollover accounts of

18 the taxpayer for the taxable year in which such sale

19 occurs, and

20 ‘‘(2) are not in excess of the limits under sub21 section (c).

22 ‘‘(b) ASSET ROLLOVER ACCOUNT.—

23 ‘‘(1) GENERAL RULE.—Except as provided in

24 this section, an asset rollover account shall be treat-
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1 ed for purposes of this title in the same manner as

2 an individual retirement plan.

3 ‘‘(2) ASSET ROLLOVER ACCOUNT.—For pur4 poses of this title, the term ‘asset rollover account’

5 means an individual retirement plan which is des6 ignated at the time of the establishment of the plan

7 as an asset rollover account. Such designation shall

8 be made in such manner as the Secretary may pre9 scribe.

10 ‘‘(c) CONTRIBUTION RULES.—

11 ‘‘(1) NO DEDUCTION ALLOWED.—No deduction

12 shall be allowed under section 219 for a contribution

13 to an asset rollover account.

14 ‘‘(2) AGGREGATE CONTRIBUTION LIMITA15 TION.—Except in the case of rollover contributions,

16 the aggregate amount for all taxable years which

17 may be contributed to all asset rollover accounts es18 tablished on behalf of an individual during a quali19 fied period shall not exceed—

20 ‘‘(A) $500,000 ($250,000 in the case of a

21 separate return by a married individual), re22 duced by

23 ‘‘(B) the amount by which the aggregate

24 value of the assets held by the individual (and
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1 spouse) in individual retirement plans (other

2 than asset rollover accounts) exceeds $100,000.

3 ‘‘(3) ANNUAL CONTRIBUTION LIMITATIONS.—

4 ‘‘(A) GENERAL RULE.—The qualified con5 tribution which may be made in any taxable

6 year shall not exceed the lesser of—

7 ‘‘(i) the qualified net farm gain for

8 the taxable year, or

9 ‘‘(ii) an amount determined by mul10 tiplying the number of years the taxpayer

11 is a qualified farmer by $10,000.

12 ‘‘(B) SPOUSE.—In the case of a married

13 couple filing a joint return under section 6013

14 for the taxable year, subparagraph (A) shall be

15 applied by substituting ‘$20,000’ for ‘$10,000’

16 for each year the taxpayer’s spouse is a quali17 fied farmer.

18 ‘‘(4) TIME WHEN CONTRIBUTION DEEMED

19 MADE.—For purposes of this section, a taxpayer

20 shall be deemed to have made a contribution to an

21 asset rollover account on the last day of the preced22 ing taxable year if the contribution is made on ac23 count of such taxable year and is made not later

24 than the time prescribed by law for filing the return
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1 for such taxable year (not including extensions

2 thereof).

3 ‘‘(d) QUALIFIED NET FARM GAIN; ETC.—For pur4 poses of this section—

5 ‘‘(1) QUALIFIED NET FARM GAIN.—The term

6 ‘qualified net farm gain’ means the lesser of—

7 ‘‘(A) the net capital gain of the taxpayer

8 for the taxable year, or

9 ‘‘(B) the net capital gain for the taxable

10 year determined by only taking into account

11 gain (or loss) in connection with a disposition

12 of a qualified farm asset.

13 ‘‘(2) QUALIFIED FARM ASSET.—The term

14 ‘qualified farm asset’ means an asset used by a

15 qualified farmer in the active conduct of the trade

16 or business of farming (as defined in section

17 2032A(e)).

18 ‘‘(3) QUALIFIED FARMER.—

19 ‘‘(A) IN GENERAL.—The term ‘qualified

20 farmer’ means a taxpayer who—

21 ‘‘(i) during the 5-year period ending

22 on the date of the disposition of a qualified

23 farm asset materially participated in the

24 trade or business of farming, and
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1 ‘‘(ii) 50 percent or more of such trade

2 or business is owned by the taxpayer (or

3 his spouse) during such 5-year period.

4 ‘‘(B) MATERIAL PARTICIPATION.—For

5 purposes of this paragraph, a taxpayer shall be

6 treated as materially participating in a trade or

7 business if he meets the requirements of section

8 2032A(e)(6).

9 ‘‘(4) ROLLOVER CONTRIBUTIONS.—Rollover

10 contributions to an asset rollover account may be

11 made only from other asset rollover accounts.

12 ‘‘(e) DISTRIBUTION RULES.—For purposes of this

13 title, the rules of paragraphs (1) and (2) of section 408(d)

14 shall apply to any distribution from an asset rollover ac15 count.

16 ‘‘(f) INDIVIDUAL REQUIRED TO REPORT QUALIFIED

17 CONTRIBUTIONS.—

18 ‘‘(1) IN GENERAL.—Any individual who—

19 ‘‘(A) makes a qualified contribution to any

20 asset rollover account for any taxable year, or

21 ‘‘(B) receives any amount from any asset

22 rollover account for any taxable year,

23 shall include on the return of tax imposed by chap24 ter 1 for such taxable year and any succeeding tax25 able year (or on such other form as the Secretary
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1 may prescribe) information described in paragraph

2 (2).

3 ‘‘(2) INFORMATION REQUIRED TO BE SUP4 PLIED.—The information described in this para5 graph is information required by the Secretary

6 which is similar to the information described in sec7 tion 408(o)(4)(B).

8 ‘‘(3) PENALTIES.—For penalties relating to re9 ports under this paragraph, see section 6693(b).’’

10 (b) CONTRIBUTIONS NOT DEDUCTIBLE.—Section

11 219(d) of the Internal Revenue Code of 1986 (relating to

12 other limitations and restrictions) is amended by adding

13 at the end thereof the following new paragraph:

14 ‘‘(5) CONTRIBUTIONS TO ASSET ROLLOVER AC15 COUNTS.—No deduction shall be allowed under this

16 section with respect to a contribution under section

17 1034A.’’

18 (c) EXCESS CONTRIBUTIONS.—

19 (1) IN GENERAL.—Section 4973 of the Internal

20 Revenue Code of 1986 (relating to tax on excess

21 contributions to individual retirement accounts, cer22 tain section 403(b) contracts, and certain individual

23 retirement annuities) is amended by adding at the

24 end the following new subsection:
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1 ‘‘(d) ASSET ROLLOVER ACCOUNTS.—For purposes of

2 this section, in the case of an asset rollover account re3 ferred to in subsection (a)(1), the term ‘excess contribu4 tion’ means the excess (if any) of the amount contributed

5 for the taxable year to such account over the amount

6 which may be contributed under section 1034A.’’

7 (2) CONFORMING AMENDMENTS.—

8 (A) Section 4973(a)(1) of such Code is

9 amended by striking ‘‘or’’ and inserting ‘‘an

10 asset rollover account (within the meaning of

11 section 1034A), or’’.

12 (B) The heading for section 4973 of such

13 Code is amended by inserting ‘‘ASSET ROLL14 OVER ACCOUNTS,’’ after ‘‘CONTRACTS’’.

15 (C) The table of sections for chapter 43 of

16 such Code is amended by inserting ‘‘asset roll17 over accounts,’’ after ‘‘contracts’’ in the item

18 relating to section 4973.

19 (d) TECHNICAL AMENDMENTS.—

20 (1) Paragraph (1) of section 408(a) of the In21 ternal Revenue Code of 1986 (defining individual re22 tirement account) is amended by inserting ‘‘or a

23 qualified contribution under section 1034A,’’ before

24 ‘‘no contribution’’.
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1 (2) Subparagraph (A) of section 408(d)(5) of

2 such Code is amended by inserting ‘‘or qualified con3 tributions under section 1034A’’ after ‘‘rollover con4 tributions’’.

5 (3)(A) Section 6693(b)(1) of such Code is

6 amended by inserting ‘‘or 1034A(f)(2)’’ after

7 ‘‘408(o)(4)’’ in subparagraph (A).

8 (B) Section 6693(b)(2) of such Code is amend9 ed by inserting ‘‘or 1034A(f)(2)’’ after ‘‘408(o)(4)’’.

10 (4) The table of sections for part III of sub11 chapter O of chapter 1 of such Code is amended by

12 inserting after the item relating to section 1034 the

13 following new item:

‘‘Sec. 1034A. Rollover of gain on sale of farm assets into asset rollover account.’’

14 (e) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to sales and exchanges after the

16 date of enactment of this Act.

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