I
103D CONGRESS
1ST SESSION
H. R. 1931
To amend the Internal Revenue Code of 1986 to allow farmers’ cooperatives
to elect to include gains or losses from certain dispositions in the deter-
mination of net earnings, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 29, 1993
Mr. KOPETSKI (for himself, Mr. GRANDY, Mr. HOAGLAND, and Mr. HERGER)
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 allow farm-
ers’ cooperatives to elect to include gains or losses from
certain dispositions in the determination of net earnings,
and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. GAINS AND LOSSES FROM CERTAIN DISPOSI-
TIONS BY FARMERS COOPERATIVES.
(a) IN GENERAL.—Section 1388 of the Internal Rev-
enue Code of 1986 (relating to definitions and special
rules) is amended by adding at the end thereof the follow-
ing new subsection:
‘‘(k) TREATMENT OF GAINS OR LOSSES ON THE DIS-
POSITION OF CERTAIN ASSETS.—For purposes of this
title, in the case of any farmer cooperative—
‘‘(1) IN GENERAL.—A farmer cooperative may
elect to include gain or loss from the sale or other
disposition of any asset (including stock or any other
ownership or financial interest in another entity) in
net earnings of the organization from business done
with or for patrons, if such asset was used by the
organization to facilitate the conduct of business
done with or for patrons.
‘‘(2) ALLOCATION.—An election under para-
graph (1) shall not apply to gain or loss on the sale
or other disposition of any asset to the extent that
such asset was used for purposes other than to fa-
cilitate the conduct of business done with or for pa-
trons. For purposes of this paragraph, the extent of
such use may be determined on the basis of any rea-
sonable method for making allocations of income or
expense between patronage and nonpatronage oper-
ations.
‘‘(3) PERIOD OF ELECTION.—An election under
paragraph (1) shall apply to the taxable year for
which made and all subsequent taxable years unless
revoked by the organization. Any such revocation
shall be effective for taxable years beginning after
the date on which notice of the revocation is filed
with the Secretary.
‘‘(4) ELECTION AFTER REVOCATION.—If an or-
ganization has made an election under paragraph
(1) and such election has been revoked under para-
graph (3), such organization shall not be eligible to
make an election under paragraph (1) for any tax-
able year before its 3rd taxable year which begins
after the 1st taxable year for which such revocation
is effective, unless the Secretary consents to such
election.
‘‘(5) COORDINATION
WITH
SECTION
1231.—If
an organization has made an election under para-
graph (1), section 1231 shall be applied separately
with respect to both patronage-sourced gains and
losses and nonpatronage-sourced gains and losses.
‘‘(6) FARMER COOPERATIVE.—For purposes of
this subsection, the term ‘farmer cooperative’ means
any farmers’, fruit growers’, or like association to
which subpart I of this subchapter applies.
‘‘(7) NO
INFERENCE.—Nothing in this sub-
section shall be construed to infer that a change in
the law is intended for farmer cooperatives not hav-
ing in effect an election under paragraph (1) or
other organizations. Any gain or loss from the sale
or other disposition of any asset by such organiza-
tion shall be treated as if this subsection had not
been enacted.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to sales or other dispositions in
taxable years beginning after the date of the enactment
of this Act.
Æ