I
107TH CONGRESS
1ST SESSION
H. R. 294
To amend the Internal Revenue Code of 1986 to provide an exclusion for
gain from the sale of farmland which is similar to the exclusion from
gain on the sale of a principal residence.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 30, 2001
Mr. OSBORNE (for himself, Mr. BEREUTER, Mr. POMEROY, Mrs. EMERSON,
Mr. SKELTON, Mr. SHOWS, Mr. FROST, and Mr. GOODE) 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
an exclusion for gain from the sale of farmland which
is similar to the exclusion from gain on the sale of
a principal residence.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Farmland Capital
Gains Equity Act of 2001’’.
SEC. 2. EXCLUSION OF GAIN FROM SALE OF CERTAIN
FARMLAND.
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
items specifically excluded from gross income) is amended
by adding after section 121 the following new section:
‘‘SEC. 121A. EXCLUSION OF GAIN FROM SALE OF QUALIFIED
FARM PROPERTY.
‘‘(a) EXCLUSION.—In the case of a natural person,
gross income shall not include gain from the sale or ex-
change of qualified farm property.
‘‘(b) LIMITATION ON AMOUNT OF EXCLUSION.—
‘‘(1) IN GENERAL.—The amount of gain ex-
cluded from gross income under subsection (a) with
respect to any taxable year shall not exceed
$500,000 ($250,000 in the case of a married indi-
vidual filing a separate return), reduced by the ag-
gregate amount of gain excluded under subsection
(a) for all preceding taxable years.
‘‘(2) SPECIAL RULE FOR JOINT RETURNS.—The
amount of the exclusion under subsection (a) on a
joint return for any taxable year shall be allocated
equally between the spouses for purposes of applying
the limitation under paragraph (1) for any suc-
ceeding taxable year.
‘‘(c) QUALIFIED FARM PROPERTY.—For purposes of
this section—
‘‘(1) IN GENERAL.—The term ‘qualified farm
property’ means real property located in the United
States if, during periods aggregating 3 years or
more of the 5-year period ending on the date of the
sale or exchange of such real property—
‘‘(A) such real property was used by the
taxpayer or a member of the family of the tax-
payer as a farm for farming purposes, and
‘‘(B) there was material participation by
the taxpayer (or such a member) in the oper-
ation of the farm.
‘‘(2) OTHER DEFINITIONS.—The terms ‘mem-
ber of the family’, ‘farm’, and ‘farming purposes’
have the respective meanings given such terms by
paragraphs (2), (4), and (5) of section 2032A(e).
‘‘(3) SPECIAL
RULES.—Rules similar to the
rules of paragraphs (4) and (5) of section 2032A(b)
and paragraphs (3) and (6) of section 2032A(e)
shall apply.
‘‘(d) OTHER RULES.—For purposes of this section,
rules similar to the rules of subsection (e) and subsection
(f) of section 121 shall apply.’’
(b) CONFORMING AMENDMENT.—The table of sec-
tions for part III of subchapter B of chapter 1 of the In-
ternal Revenue Code of 1986 is amended by adding after
the item relating to section 121 the following new item:
‘‘Sec. 121A. Exclusion of gain from sale of qualified farm prop-
erty.’’
(c) EFFECTIVE DATE.—The amendment made by
this section shall apply to any sale or exchange on or after
May 7, 1997, in taxable years ending after such date.
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