IB 
Union Calendar No. 675 
114TH CONGRESS 
2D SESSION 
H. R. 4220 
[Report No. 114–862] 
To amend the Internal Revenue Code of 1986 to facilitate water leasing 
and water transfers to promote conservation and efficiency. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 10, 2015 
Mr. BUCK (for himself, Mr. GOSAR, Mr. BISHOP of Utah, Mrs. LUMMIS, Mrs. 
LOVE, and Mr. TIPTON) introduced the following bill; which was referred 
to the Committee on Ways and Means 
DECEMBER 8, 2016 
Additional sponsors: Mr. COFFMAN, Mr. SIMPSON, Mr. LAMBORN, and Mr. 
POLIS 
DECEMBER 8, 2016 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on December 10, 2015] 
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A BILL 
To amend the Internal Revenue Code of 1986 to facilitate 
water leasing and water transfers to promote conserva-
tion and efficiency. 
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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 ‘‘Water and Agriculture 
Tax Reform Act of 2016’’. 
SEC. 2. FACILITATE WATER LEASING AND WATER TRANS-
FERS TO PROMOTE CONSERVATION AND EF-
FICIENCY. 
(a) IN GENERAL.—Paragraph (12) of section 501(c) 
of the Internal Revenue Code of 1986 is amended by adding 
at the end the following new subparagraph: 
‘‘(I) TREATMENT OF MUTUAL DITCH IRRI-
GATION COMPANIES.— 
‘‘(i) IN GENERAL.—In the case of a 
mutual ditch or irrigation company or of a 
like organization to a mutual ditch or irri-
gation company, subparagraph (A) shall be 
applied without taking into account any in-
come received or accrued— 
‘‘(I) from the sale, lease, or ex-
change of fee or other interests in real 
and personal property, including inter-
ests in water, 
‘‘(II) from the sale or exchange of 
stock in a mutual ditch or irrigation 
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company (or in a like organization to 
a mutual ditch or irrigation company) 
or contract rights for the delivery or 
use of water, or 
‘‘(III) from the investment of pro-
ceeds from sales, leases, or exchanges 
under subclauses (I) and (II), 
except that any income received under sub-
clause (I), (II), or (III) which is distributed 
or expended for expenses (other than for op-
erations, maintenance, and capital im-
provements) of the mutual ditch or irriga-
tion company or of the like organization to 
a mutual ditch or irrigation company (as 
the case may be) shall be treated as non-
member income in the year in which it is 
distributed or expended. For purposes of the 
preceding sentence, expenses (other than for 
operations, maintenance, and capital im-
provements) include expenses for the con-
struction of conveyances designed to deliver 
water outside of the system of the mutual 
ditch or irrigation company or of the like 
organization. 
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‘‘(ii) TREATMENT OF ORGANIZATIONAL 
GOVERNANCE.—In the case of a mutual 
ditch or irrigation company or of a like or-
ganization to a mutual ditch or irrigation 
company, where State law provides that 
such a company or organization may be or-
ganized in a manner that permits voting on 
a basis which is pro rata to share owner-
ship on corporate governance matters, sub-
paragraph (A) shall be applied without tak-
ing into account whether its member share-
holders have one vote on corporate govern-
ance matters per share held in the corpora-
tion. Nothing in this clause shall be con-
strued to create any inference about the re-
quirements of this subsection for companies 
or organizations not included in this 
clause.’’. 
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to taxable years beginning after De-
cember 31, 2016. 
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Union Calendar No. 675 
114TH CONGRESS 
2D SESSION 
H. R. 4220 
[Report No. 114–862] 
A BILL 
To amend the Internal Revenue Code of 1986 to 
facilitate water leasing and water transfers to 
promote conservation and efficiency. 
DECEMBER 8, 2016 
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed 
VerDate Sep 11 2014 
00:17 Dec 09, 2016
Jkt 069200
PO 00000
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