I
105TH CONGRESS
2D SESSION
H. R. 4565
To amend the Internal Revenue Code of 1986 to increase the years for
carryback of net operating losses for certain farm losses.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 14, 1998
Mr. TANNER 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 increase
the years for carryback of net operating losses for certain
farm losses.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. NET OPERATING LOSS OF FARMERS.
(a) INCREASE IN CARRYBACK YEARS.—Paragraph
(1) of section 172(b) of the Internal Revenue Code of
1986 (relating to net operating loss carrybacks and
carryforwards) is amended by adding at the end the fol-
lowing new subparagraph:
‘‘(G) FARMING
LOSSES.—Subparagraph
(A)(i) shall be applied by substituting ‘10 years’
for ‘2 years’ with respect to the portion of the
net operating loss of an eligible taxpayer (as de-
fined in subsection (i)) for any taxable year be-
ginning after December 31, 1997, and ending
before January 1, 2000, which is a farming loss
(as so defined) with respect to the taxpayer.’’
(b) DEFINITIONS AND RULES RELATING TO FARM-
ING LOSSES.—Section 172 of such Code is amended by
redesignating subsection (i) as subsection (j) and inserting
after subsection (h) the following new subsection:
‘‘(i) DEFINITIONS AND RULES RELATING TO FARM-
ING LOSSES.—For purposes of this section—
‘‘(1) FARMING LOSS.—
‘‘(A) IN
GENERAL.—The term ‘farming
loss’ means the lesser of—
‘‘(i) the net operating loss of the tax-
payer for the taxable year, or
‘‘(ii) the net operating loss of the tax-
payer for the taxable year determined by
only taking into account items of income
and deduction attributable to 1 or more
qualified farming businesses of the tax-
payer.
‘‘(B) DOLLAR LIMITATION.—
‘‘(i) IN GENERAL.—The farming loss
of a taxpayer for any taxable year shall not
exceed $200,000.
‘‘(ii) AGGREGATION RULES.—
‘‘(I) IN
GENERAL.—All persons
treated as 1 employer under sub-
sections (a) or (b) of section 52 shall
be treated as 1 person.
‘‘(II) PASS-THRU
ENTITY.—In
the case of a partnership, trust, or
other pass-thru entity, the limitation
shall be applied at both the entity and
the owner level.
‘‘(III) OWNER.—The limitation
shall be reduced by the amount of
farming loss determined for a cor-
poration for which the taxpayer is a
50 percent owner in the taxable year
of the corporation ending in the tax-
able year of the taxpayer owner.
‘‘(2) ELIGIBLE TAXPAYER.—
‘‘(A) IN GENERAL.—The term ‘eligible tax-
payer’ means a taxpayer which derives more
than 50 percent of its gross income for the 3-
year period beginning 2 years prior to the cur-
rent taxable year from qualified farming busi-
nesses.
‘‘(B) QUALIFIED
FARMING
BUSINESS.—
The term ‘qualified farming business’ means a
trade or business of farming (within the mean-
ing of section 2032A)—
‘‘(i) with respect to which—
‘‘(I) the taxpayer or a member of
the family of the taxpayer materially
participates (within the meaning of
section 2032A(e)(6)), or
‘‘(II) in the case of a taxpayer
other than an individual, a 20 percent
owner of the taxpayer or a member of
the owner’s family materially partici-
pates (as so defined), and
‘‘(ii) which does not receive in excess
of $7,000,000 from sales in a taxable year.
For purposes of clause (i)(II), owners which are
members of a single family shall be treated as
a single owner.
‘‘(3) OWNER.—
‘‘(A) 20 PERCENT OWNER.—The term ‘20
percent owner’ means any person who would be
described in section 416(i)(1)(B)(i) if ‘20 per-
cent’ were substituted for ‘5 percent’ each place
it appears in such section.
‘‘(B) 50 PERCENT OWNER.—The term ‘50
percent owner’ means any person who would be
described in section 416(i)(1)(B)(i) if ‘50 per-
cent’ were substituted for ‘5 percent’ each place
it appears in such section.
‘‘(4) 
COORDINATION
WITH
SUBSECTION
(b)(2).—For purposes of applying subsection (b)(2),
a farming loss for any taxable year shall be treated
as a separate net operating loss for such taxable
year to be taken into account after the remaining
portion of the net operating loss for such taxable
year.
‘‘(5) ELECTION.—Any taxpayer entitled to a
10-year carryback under subsection (b)(1)(G) from
any loss year may elect to have the carryback period
with respect to such loss year, and any portion of
the farming loss for such year, determined without
regard to subsection (b)(1)(G). Such election shall
be made in such manner as may be prescribed by
the Secretary and shall be made by the due date (in-
cluding extensions of time) for filing the taxpayer’s
return for the taxable year of the net operating loss.
Such election, once made for any taxable year, shall
be irrevocable for that taxable year.’’
Æ