I
105TH CONGRESS
1ST SESSION
H. R. 3036
To amend the Internal Revenue Code of 1986 to exempt small unincorporated
farm businesses from the alternative minimum tax.
IN THE HOUSE OF REPRESENTATIVES
NOVEMBER 12, 1997
Mr. SMITH of Michigan (for himself, Mr. BARCIA, Mr. LATHAM, Mr. JENKINS,
Mr. POMBO, and Mr. CALVERT) 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 exempt
small unincorporated farm businesses from the alter-
native minimum tax.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. EXEMPTION FOR FARM INCOME FROM UNIN-
CORPORATED FARM BUSINESSES FROM AL-
TERNATIVE MINIMUM TAX.
(a) IN GENERAL.—Section 55 of the Internal Reve-
nue Code of 1986 (relating to alternative minimum tax
imposed) is amended by adding at the end the following
new subsection:
‘‘(f) EXEMPTION FOR UNINCORPORATED FARMING
BUSINESS INCOME.—
‘‘(1) IN GENERAL.—In the case of a taxpayer
(other than a corporation) described in paragraph
(2), income from a farming business engaged in by
the taxpayer, and deductions relating to the produc-
tion of such income, shall not be taken into account
in determining alternative minimum taxable income
for the taxable year.
‘‘(2) GROSS RECEIPTS TEST.—A taxpayer is de-
scribed in this paragraph if the gross receipts of the
taxpayer attributable to such farming business—
‘‘(A) meet the $5,000,000 gross receipts
test of section 448(c) for the first taxable year
of the taxpayer beginning after December 31,
1996, and
‘‘(B) would meet such test for the taxable
year and all prior taxable years beginning after
such first taxable year if such test were applied
by substituting ‘$7,500,000’ for ‘$5,000,000’.
‘‘(3) PROSPECTIVE APPLICATION OF MINIMUM
TAX IF INCOME FROM A FARMING BUSINESS CEASES
TO BE SMALL.—In the case of a taxpayer whose in-
come from a farming business is not taken into ac-
count for any prior taxable year by reason of para-
graph (1), the application of this part for taxable
years beginning with the first taxable year for which
farming income of the taxpayer is so taken into ac-
count shall be determined in accordance with rules
similar to the rules of subparagraphs (A) through
(G) of subsection (e)(2).
‘‘(4) FARMING BUSINESS.—For purposes of this
subsection, the term ‘farming business’ has the
meaning given such term by section 263A(e)(4).
‘‘(5) AGGREGATION RULES.—For purposes of
determining gross receipts under paragraph (2)—
‘‘(A) all related persons engaged in a farm-
ing business shall be treated as 1 person, and
‘‘(B) a person is related to another person
if the related person bears a relationship to
such person specified in section 147(a)(2) or
the related person and such person are engaged
in trades or businesses under common control
(within the meaning of subsections (a) and (b)
of section 52).
For purposes of the preceding sentence, in applying
section 267(b) or 707(b)(1) by reason of section
147(a)(2)(A), ‘10 percent’ shall be substituted for
‘50 percent’.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 1997.
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