under section 1261 by reason of the death of the 
taxpayer, the taxpayer may elect to pay part or all 
of tax imposed on such gain in 2 or more (but not 
exceeding 5) equal installments. 
‘‘(2) DATE FOR PAYMENT OF INSTALLMENTS.— 
If an election is made under paragraph (1), the first 
installment shall be paid not later than the date on 
which the tax for the taxable year in which the gain 
described in paragraph (1) occurs is due, and each 
succeeding installment shall be paid on or before the 
date which is 1 year after the date prescribed by this 
paragraph for payment of the preceding installment. 
‘‘(b) ELIGIBLE CAPITAL ASSET.—For purposes of 
this section, the term ‘eligible property’ means any prop-
erty other than personal property of a type which is ac-
tively traded (within the meaning of section 1092(d)(1)). 
‘‘(c) PORTION OF TAX ELIGIBLE.—The amount of 
tax to which this section applies shall not exceed the excess 
of— 
‘‘(1) the tax computed under chapter 1 (deter-
mined after application of section 1261), over 
‘‘(2) the tax computed under chapter 1 (deter-
mined without regard to section 1261). 
‘‘(d) ELECTION.—Any election under subsection (a) 
shall be made not later than the time prescribed by section 
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6072 for filing the return of tax imposed under chapter 
1 (including extensions thereof), and shall be made in such 
manner as the Secretary shall by regulations prescribe. If 
an election under subsection (a) is made, the provisions 
of this subtitle shall apply as though the Secretary were 
extending the time for payment of the tax. 
‘‘(e) PRORATION
OF
DEFICIENCY
TO
INSTALL-
MENTS.—If an election is made under subsection (a) to 
pay any part of the tax imposed under chapter 1 in install-
ments and a deficiency has been assessed, the deficiency 
shall (subject to the limitation provided by subsection 
(a)(2)) be prorated to the installments payable under sub-
section (a). The part of the deficiency so prorated to any 
installment the date for payment of which has not arrived 
shall be collected at the same time as, and as a part of, 
such installment. The part of the deficiency so prorated 
to any installment the date for payment of which has ar-
rived shall be paid upon notice and demand from the Sec-
retary. This subsection shall not apply if the deficiency 
is due to negligence, to intentional disregard of rules and 
regulations, or to fraud with intent to evade tax. 
‘‘(f) TIME FOR PAYMENT OF INTEREST.—If the time 
for payment of any amount of tax has been extended 
under this section, interest payable under section 6601 on 
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any unpaid portion shall be paid annually at the same time 
as, and as part of, each installment payment of the tax. 
‘‘(g) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary to the application 
of this section. 
‘‘(h) CROSS-REFERENCES.— 
‘‘(1) SECURITY.—For authority of the Sec-
retary to require security in the case of an extension 
under this section, see section 6165. 
‘‘(2) INTEREST.—For provisions relating to in-
terest on tax payable in installments under this sec-
tion, see subsection (k) of section 6601.’’. 
(2) COORDINATION WITH TRANSFEREE LIABIL-
ITY.—Section 6109 of such Code is amended by re-
designating subsections (g), (h), and (i) as sub-
sections (h), (i), and (j), respectively, and by insert-
ing after subsection (f) the following new subsection: 
‘‘(g) PERIOD OF ASSESSMENT IN CASE OF EXTEN-
SION OF TIME FOR PAYMENT OF TAX UNDER SECTION 
1261.—For purposes of subsection (c), the period of limi-
tation for assessment against the transferor of any tax im-
posed under section 1261 the payment of which is ex-
tended under section 6168 shall not be treated as expiring 
earlier than the due date for the last payment under (a)(2) 
of such section.’’. 
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(3) CLERICAL AMENDMENT.—The table of sec-
tions for subpart B of chapter 62 of such Code is 
amended by adding at the end the following new 
item: 
‘‘Sec. 6168. Extension of time for payment of capital gains on certain assets 
realized by reason of death.’’. 
(b) INTEREST.—Section 6601 of such Code is amend-
ed by redesignating subsection (k) as subsection (l) and 
by inserting after subsection (j) the following new sub-
section: 
‘‘(k) SPECIAL RATE FOR TAX EXTENDED UNDER 
SECTION 6168.—If the time for payment of an amount 
of tax imposed by section 1261 is extended as provided 
in section 6168, in lieu of the annual rate provided by 
subsection (a), interest shall be paid at a rate equal to 
45 percent of the annual rate provided by subsection (a). 
For purposes of this subsection, the amount of any defi-
ciency which is prorated to installments payable under sec-
tion 6168 shall be treated as an amount of tax payable 
in installments under such section.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
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SEC. 7. LIMITATION ON USE OF LIKE-KIND EXCHANGES TO 
AVOID TAX ON REAL ESTATE GAINS. 
(a) LIMITATION ON NONRECOGNITION OF GAIN.— 
Section 1031(a) of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new para-
graph: 
‘‘(4) LIMITATIONS.— 
‘‘(A) ANNUAL LIMITATION.—The amount 
of gain excluded from recognition under para-
graph (1) with respect to any property of the 
taxpayer during the taxable year which is not 
qualified property shall not exceed $500,000. 
‘‘(B) AGGREGATE
LIMITATION.—The ag-
gregate amount of gain excluded from recogni-
tion under subparagraph (A) by the taxpayer 
for 
all 
taxable 
years 
shall 
not 
exceed 
$1,000,000. 
‘‘(C) QUALIFIED
PROPERTY.—For pur-
poses of this paragraph, the term ‘qualified 
property’ means property— 
‘‘(i) which is used for farming pur-
poses, or 
‘‘(ii) which is exchanged for property 
that will serve the same specific purpose.’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to exchanges of real property after 
December 31, 2025. 
SEC. 8. LIMITATION ON DEDUCTION FOR QUALIFIED BUSI-
NESS INCOME. 
(a) IN GENERAL.—Section 199A(a)(2) of the Inter-
nal Revenue Code of 1986 is amended— 
(1) in subparagraph (A), by striking ‘‘the tax-
able income of the taxpayer for the taxable year’’ 
and inserting ‘‘so much of the taxable income of the 
taxpayer for the taxable year as does not exceed 
$1,000,000’’, and 
(2) in subparagraph (B), by striking ‘‘the net 
capital gain (as defined in section 1(h)) of the tax-
payer for such taxable year’’ and inserting ‘‘all in-
come of the taxpayer for such taxable year other 
than qualified business income’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
Æ 
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