I 
109TH CONGRESS 
1ST SESSION 
H. R. 651
To amend the Internal Revenue Code of 1986 to make improvements to 
assist young farmers and ranchers. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 8, 2005
Mr. KING of Iowa (for himself, Mr. SHIMKUS, Mr. LEACH, Mr. LATHAM, and 
Mr. NUSSLE) 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 make 
improvements to assist young farmers and ranchers.
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 ‘‘Agricultural Bond Im-
provement Act of 2005’’. 
SEC. 2. EXEMPTION OF AGRICULTURAL BONDS FROM PRI-
VATE ACTIVITY BOND VOLUME LIMITS. 
(a) IN GENERAL.—Section 146(g) of the Internal 
Revenue Code of 1986 (relating to exception for certain 
bonds) is amended by striking ‘‘and’’ at the end of para-
graph (3), by striking the period at the end of paragraph 
(4) and inserting ‘‘, and’’, and by inserting after para-
graph (4) the following new paragraph: 
‘‘(5) any qualified small issue bond described in 
section 144(a)(12)(B)(ii).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to bonds issued after the date of 
the enactment of this Act. 
SEC. 3. FARM SERVICE AGENCY GUARANTEES EXEMPTED 
FROM FEDERAL GUARANTEE PROHIBITION 
ON TAX-EXEMPT BONDS. 
(a) IN GENERAL.—Subparagraph (A) of section 
149(b)(3) of the Internal Revenue Code of 1986 (relating 
to certain insurance programs) is amended by striking 
‘‘or’’ at the end of clause (ii), by striking the period at 
the end of clause (iii) and inserting ‘‘, or’’, and by insert-
ing after clause (iii) the following new clause: 
‘‘(iv) any guarantee of a loan under 
title III of the Consolidated Farm and 
Rural Development Act.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to bonds issued after the date of 
the enactment of this Act.
SEC. 4. INCREASE IN LOAN LIMITS ON AGRICULTURAL 
BONDS. 
(a) IN GENERAL.—Subparagraph (A) of section 
147(c)(2) of the Internal Revenue Code of 1986 (relating 
to general rule for exception for first-time farmers) is 
amended to read as follows: 
‘‘(A) IN GENERAL.—
‘‘(i) If the requirements of subpara-
graph (B) are met with respect to any 
land, paragraph (1) shall not apply to such 
land, and subsection (d) shall not apply to 
property to be used thereon for farming 
purposes, but only to the extent of expend-
itures (financed with the proceeds of the 
issue) not in excess of $450,000. 
‘‘(ii) In the case of any calendar year 
after 2005, the $450,000 amount con-
tained in clause (i) shall be increased by an 
amount equal to such dollar amount multi-
plied by the inflation percentage deter-
mined under section 305(c) of the Consoli-
dated Farm and Rural Development Act (7 
U.S.C. 1925(c)) for the calendar year, de-
termined by substituting ‘calendar year’ 
for ‘fiscal year’ each place it appears and 
by substituting ‘2004’ for ‘1996’ in para-
graph (2) thereof. Any increase determined 
under this clause shall be rounded to the 
nearest multiple of $100.’’. 
(b) 
CONFORMING
AMENDMENT.—Section 
147(c)(2)(C)(i)(II) of such Code is amended by striking 
‘‘$250,000’’ and inserting ‘‘the amount in effect under 
subparagraph (A)(i)’’. 
(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to bonds issued after the date of 
the enactment of this Act. 
SEC. 5. REPEAL OF DOLLAR AMOUNT IN DEFINITION OF 
SUBSTANTIAL FARMLAND. 
(a) IN GENERAL.—Subparagraph (E) of section 
147(c)(2) of the Internal Revenue Code of 1986 (defining 
substantial farmland) is amended to read as follows: 
‘‘(E) SUBSTANTIAL FARMLAND.—For pur-
poses of this paragraph, the term ‘substantial 
farmland’ means any parcel of land unless such 
parcel is smaller than 30 percent of the average 
size of a farm in the county in which such par-
cel is located.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to bonds issued after the date of 
the enactment of this Act.
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