I
107TH CONGRESS
2D SESSION
H. R. 5227
To amend the Internal Revenue Code of 1986 to provide involuntary conver-
sion tax relief for producers forced to sell livestock due to weather-
related conditions or Federal land management agency policy or action,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JULY 25, 2002
Mr. MORAN of Kansas (for himself, Mr. THUNE, Mr. OSBORNE, and Mrs.
CUBIN) introduced the following bill; which was referred to the Com-
mittee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide
involuntary conversion tax relief for producers forced to
sell livestock due to weather-related conditions or Federal
land management agency policy or action, 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. SHORT TITLE.
This Act may be cited as the ‘‘Livestock Reinvest-
ment Extension Act of 2002’’.
SEC. 2. INVOLUNTARY CONVERSION RELIEF FOR PRO-
DUCERS FORCED TO SELL LIVESTOCK DUE
TO WEATHER-RELATED CONDITIONS OR FED-
ERAL LAND MANAGEMENT AGENCY POLICY
OR ACTION.
(a) INCOME INCLUSION RULES.—Subsection (e) of
section 451 of the Internal Revenue Code of 1986 (relat-
ing to general rule for taxable year of inclusion) is amend-
ed to read as follows:
‘‘(e) SPECIAL RULE FOR PROCEEDS FROM LIVE-
STOCK SOLD ON ACCOUNT OF WEATHER-RELATED CON-
DITIONS OR FEDERAL LAND MANAGEMENT AGENCY POL-
ICY OR ACTION.—
‘‘(1) IN GENERAL.—If—
‘‘(A) a taxpayer sells or exchanges live-
stock in excess of the number the taxpayer
would sell if he followed his usual business
practices, and
‘‘(B) the taxpayer establishes that, under
his usual business practices, the sale or ex-
change would not have occurred in the taxable
year in which it occurred if it were not for—
‘‘(i) a drought, flood, or other weath-
er-related condition that resulted in the
area being designated as eligible for assist-
ance by the Federal Government, or
‘‘(ii) forced sales resulting from Fed-
eral land management agency policy or ac-
tion,
the taxpayer may elect to include income from such
excess sales or exchanges for the second taxable year
following the taxable year in which the circumstance
applicable under subparagraph (B) ceased to exist.
‘‘(2) LIMITATION.—Paragraph (1) shall apply
only to a taxpayer whose principal trade or business
is 
farming 
(within 
the 
meaning 
of 
section
6420(c)(3)).
‘‘(3) SPECIAL RULES FOR DROUGHT DESIGNA-
TIONS.—For purposes of this subsection, areas may
be designated as eligible for drought condition
assistance—
‘‘(A) by Federal Government declaration,
or
‘‘(B) through Farm Service Agency flash
reports as verified and approved by the Farm
Service Agency director of the State in which
such condition exists.’’.
(b) RULES FOR REPLACEMENT OF INVOLUNTARILY
CONVERTED LIVESTOCK.—Subsection (e) of section 1033
of such Code (relating to involuntary conversions) is
amended to read as follows:
‘‘(e) LIVESTOCK SOLD ON ACCOUNT OF WEATHER-
RELATED CONDITIONS OR FEDERAL LAND MANAGEMENT
AGENCY POLICY OR ACTION.—
‘‘(1) IN GENERAL.—For purposes of this sub-
title, the sale or exchange of livestock (other than
poultry) by the taxpayer in excess of the number the
taxpayer would sell if he followed usual business
practices, shall be treated as an involuntary conver-
sion to which this section applies if such livestock
are sold or exchanged by the taxpayer solely on ac-
count of—
‘‘(A) drought, flood, or other weather-re-
lated conditions, or
‘‘(B) forced sales caused by Federal land
management agency policy or action.
‘‘(2) EXTENSION OF REPLACEMENT PERIOD.—
‘‘(A) DROUGHTS, ETC.—In a case to which
paragraph (1)(A) applies, the 2-year period in
subsection (a)(2)(B) shall not expire before the
later of—
‘‘(i) 4 years after the close of the first
taxable year in which any part of the gain
upon the conversion is realized, or
‘‘(ii) 2 years after the close of the tax-
able year in which the drought, flood, or
other weather-related condition ceased to
exist.
‘‘(B) FORCED SALES.—In a case to which
paragraph (1)(B) applies, the 2-year period in
subsection (a)(2)(B) shall not expire before 2
years after the close of the taxable year in
which the forced sales resulting from Federal
land management agency policy or action have
ended.’’.
(3) 
CONVERSION
BY
HEIRS.—Section
1033(a)(2) of such Code is amended by adding at
the end the following new subparagraph:
‘‘(F) CONVERSION OF CERTAIN PROPERTY
BY HEIRS.—In the case of an involuntary con-
version of property described in subsection (e),
if the taxpayer dies during the period specified
in subparagraph (B), the requirements of sub-
paragraph (A) shall be satisfied if the
decedent’s—
‘‘(i) personal representative,
‘‘(ii) the beneficiary of the converted
property, if no personal representative ex-
ists, or
‘‘(iii) the trustee in the case of a
trust,
replaces the property within such period.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to sales and exchanges after De-
cember 31, 2000.
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