‘‘(A) IN GENERAL.—If plants bearing an 
edible crop for human consumption were lost or 
damaged (while in the hands of the taxpayer) 
by reason of freezing temperatures, disease, 
drought, pests, or casualty and the taxpayer re-
plants plants bearing the same type of crop 
(whether on the same parcel of land on which 
such lost or damaged plants were located or any 
other parcel of land of the same acreage in the 
United States), this section and section 263 
shall not apply to—
‘‘(i) the costs of the taxpayer of such 
replanting (other than special replanting 
costs), 
‘‘(ii) 80 percent of the taxpayer’s spe-
cial replanting costs of such replanting, 
‘‘(iii) the costs of the taxpayer to re-
move such plants, and 
‘‘(iv) the preproductive costs of the 
taxpayer of such replanting. 
‘‘(B) SPECIAL
REPLANTING
COSTS.—For 
purposes of this subsection, the term ‘special 
replanting costs’ means direct costs incurred 
for—
‘‘(i) plants (including qualified addi-
tional plants) and supporting structures, 
‘‘(ii) replacing irrigation and drainage 
systems, and 
‘‘(iii) land preparation and fumiga-
tion. 
For purposes of the preceding sentence, the 
term ‘qualified additional plants’ means plants 
(other than replacement plants) which bear the 
same type of crop as the lost or damaged plants 
referred to in subparagraph (A) and which are 
planted on the same parcel of land as the re-
placement plants. 
‘‘(C) PREPRODUCTIVE
COSTS.—For pur-
poses of this subsection, the term ‘preproductive 
costs’ 
means 
costs 
incurred 
during 
the 
preproductive period which are attributable 
to—
‘‘(i) the cultivation, maintenance, and 
development of the replantings, 
‘‘(ii) the administration of the activi-
ties referred to in clause (i), and 
‘‘(iii) interest on financing such activi-
ties.
Such term shall not include special replanting 
costs. 
‘‘(D) EXCLUSION
OF
NONREPLACEMENT 
ASSETS.—In no event shall subparagraph (A) 
apply to costs incurred for any asset which is 
not substantially equivalent for commercial pur-
poses to an asset used on the parcel of land on 
which the lost or damaged plants were located. 
‘‘(E) REDUCTION
FOR
LOSSES
OR
COM-
PENSATORY PAYMENTS OR ALLOWANCES.—Any 
costs otherwise eligible for the treatment under 
subparagraph (A) with respect to any parcel 
shall be reduced by—
‘‘(i) the amount of the deduction (if 
any) allowed to the taxpayer under section 
165, and 
‘‘(ii) the amount of any compensatory 
payment of allowance provided by the 
United States, a State, or a political sub-
division of a State, 
that relates to the most recent prior loss or 
damage to plants located on such parcel. 
‘‘(F) 
COORDINATION
WITH
ELECTION 
UNDER PARAGRAPH (3).—The provisions of this
paragraph shall apply notwithstanding that an 
election is made under paragraph (3).’’
(b) CONFORMING
AMENDMENT.—Section 165 of 
such Code is amended by redesignating subsection (m) as 
subsection (n) and by inserting after subsection (l) the fol-
lowing new subsection: 
‘‘(m) LOSSES TO WHICH SECTION 263A(d)(2) DE-
DUCTIONS ARE TAKEN.—No deduction shall be allowed 
under this section with respect to any loss for which the 
costs 
of 
replanting 
are 
deducted 
under 
section 
263A(d)(2)(A).’’
(c) EFFECTIVE DATE.—The amendments in this sec-
tion shall apply to costs incurred after December 31, 
2002, in taxable years ending after such date.
Æ