shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.— 
Sec. 1. Short title; etc. 
Sec. 2. Farm, fishing, and ranch risk management accounts. 
Sec. 3. Exclusion of rental income from self-employment tax. 
Sec. 4. Exclusion of conservation reserve program payments from self-employ-
ment tax. 
Sec. 5. Exemption of agricultural bonds from private activity bond volume lim-
its. 
Sec. 6. Modifications to section 512(b)(13). 
Sec. 7. Charitable deduction for contributions of food inventory. 
Sec. 8. Coordinate farmers and fishermen income averaging and the alternative 
minimum tax. 
Sec. 9. Modification to cooperative marketing rules to include value added proc-
essing involving animals. 
Sec. 10. Extension of declaratory judgment procedures to farmers’ cooperative 
organizations. 
Sec. 11. Small ethanol producer credit. 
Sec. 12. Payment of dividends on stock of cooperatives without reducing pa-
tronage dividends. 
Sec. 13. Special rules for livestock sold on account of weather-related condi-
tions. 
SEC. 2. FARM, FISHING, AND RANCH RISK MANAGEMENT 
ACCOUNTS. 
(a) IN GENERAL.—Subpart C of part II of sub-
chapter E of chapter 1 (relating to taxable year for which 
deductions taken) is amended by inserting after section 
468B the following new section: 
‘‘SEC. 468C. FARM, FISHING, AND RANCH RISK MANAGE-
MENT ACCOUNTS. 
‘‘(a) DEDUCTION ALLOWED.—In the case of an indi-
vidual engaged in an eligible farming business or commer-
cial fishing, there shall be allowed as a deduction for any 
taxable year the amount paid in cash by the taxpayer dur-
ing the taxable year to a Farm, Fishing, and Ranch Risk
Management Account (hereinafter referred to as the 
‘FFARRM Account’). 
‘‘(b) LIMITATION.— 
‘‘(1) CONTRIBUTIONS.—The amount which a 
taxpayer may pay into the FFARRM Account for 
any taxable year shall not exceed 20 percent of so 
much of the taxable income of the taxpayer (deter-
mined without regard to this section) which is at-
tributable (determined in the manner applicable 
under section 1301) to any eligible farming business 
or commercial fishing. 
‘‘(2) DISTRIBUTIONS.—Distributions from a 
FFARRM Account may not be used to purchase, 
lease, or finance any new fishing vessel, add capacity 
to any fishery, or otherwise contribute to the over-
capitalization of any fishery. The Secretary of Com-
merce shall implement regulations to enforce this 
paragraph. 
‘‘(c) ELIGIBLE BUSINESSES.—For purposes of this 
section— 
‘‘(1) ELIGIBLE FARMING BUSINESS.—The term 
‘eligible farming business’ means any farming busi-
ness (as defined in section 263A(e)(4)) which is not 
a passive activity (within the meaning of section 
469(c)) of the taxpayer.
‘‘(2) COMMERCIAL FISHING.—The term ‘com-
mercial fishing’ has the meaning given such term by 
section (3) of the Magnuson-Stevens Fishery Con-
servation and Management Act (16 U.S.C. 1802) 
but only if such fishing is not a passive activity 
(within the meaning of section 469(c)) of the tax-
payer. 
‘‘(d) FFARRM ACCOUNT.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—The term ‘FFARRM Ac-
count’ means a trust created or organized in the 
United States for the exclusive benefit of the tax-
payer, but only if the written governing instrument 
creating the trust meets the following requirements: 
‘‘(A) No contribution will be accepted for 
any taxable year in excess of the amount al-
lowed as a deduction under subsection (a) for 
such year. 
‘‘(B) The trustee is a bank (as defined in 
section 408(n)) or another person who dem-
onstrates to the satisfaction of the Secretary 
that the manner in which such person will ad-
minister the trust will be consistent with the re-
quirements of this section.
‘‘(C) The assets of the trust consist en-
tirely of cash or of obligations which have ade-
quate stated interest (as defined in section 
1274(c)(2)) and which pay such interest not 
less often than annually. 
‘‘(D) All income of the trust is distributed 
currently to the grantor. 
‘‘(E) The assets of the trust will not be 
commingled with other property except in a 
common trust fund or common investment 
fund. 
‘‘(2) ACCOUNT TAXED AS GRANTOR TRUST.— 
The grantor of a FFARRM Account shall be treated 
for purposes of this title as the owner of such Ac-
count and shall be subject to tax thereon in accord-
ance with subpart E of part I of subchapter J of 
this chapter (relating to grantors and others treated 
as substantial owners). 
‘‘(e) INCLUSION OF AMOUNTS DISTRIBUTED.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), there shall be includible in the gross in-
come of the taxpayer for any taxable year— 
‘‘(A) any amount distributed from a 
FFARRM Account of the taxpayer during such 
taxable year, and
‘‘(B) any deemed distribution under— 
‘‘(i) subsection (f)(1) (relating to de-
posits not distributed within 5 years), 
‘‘(ii) subsection (f)(2) (relating to ces-
sation in eligible farming business), and 
‘‘(iii) subparagraph (B) or (C) of sub-
section (f)(3) (relating to prohibited trans-
actions and pledging account as security). 
‘‘(2) EXCEPTIONS.—Paragraph (1)(A) shall not 
apply to— 
‘‘(A) any distribution to the extent attrib-
utable to income of the Account, and 
‘‘(B) the distribution of any contribution 
paid during a taxable year to a FFARRM Ac-
count to the extent that such contribution ex-
ceeds the limitation applicable under subsection 
(b) if requirements similar to the requirements 
of section 408(d)(4) are met. 
For purposes of subparagraph (A), distributions 
shall be treated as first attributable to income and 
then to other amounts. 
‘‘(f) SPECIAL RULES.— 
‘‘(1) TAX
ON
DEPOSITS
IN
ACCOUNT
WHICH 
ARE NOT DISTRIBUTED WITHIN 5 YEARS.—
‘‘(A) IN GENERAL.—If, at the close of any 
taxable year, there is a nonqualified balance in 
any FFARRM Account— 
‘‘(i) there shall be deemed distributed 
from such Account during such taxable 
year an amount equal to such balance, and 
‘‘(ii) the taxpayer’s tax imposed by 
this chapter for such taxable year shall be 
increased by 10 percent of such deemed 
distribution. 
The preceding sentence shall not apply if an 
amount equal to such nonqualified balance is 
distributed from such Account to the taxpayer 
before the due date (including extensions) for 
filing the return of tax imposed by this chapter 
for such year (or, if earlier, the date the tax-
payer files such return for such year). 
‘‘(B) NONQUALIFIED BALANCE.—For pur-
poses of subparagraph (A), the term ‘non-
qualified balance’ means any balance in the Ac-
count on the last day of the taxable year which 
is attributable to amounts deposited in such Ac-
count before the 4th preceding taxable year. 
‘‘(C) ORDERING RULE.—For purposes of 
this paragraph, distributions from a FFARRM
Account (other than distributions of current in-
come) shall be treated as made from deposits in 
the order in which such deposits were made, be-
ginning with the earliest deposits. 
‘‘(2) CESSATION
IN
ELIGIBLE
BUSINESS.—At 
the close of the first disqualification period after a 
period for which the taxpayer was engaged in an eli-
gible farming business or commercial fishing, there 
shall be deemed distributed from the FFARRM Ac-
count of the taxpayer an amount equal to the bal-
ance in such Account (if any) at the close of such 
disqualification period. For purposes of the pre-
ceding sentence, the term ‘disqualification period’ 
means any period of 2 consecutive taxable years for 
which the taxpayer is not engaged in an eligible 
farming business or commercial fishing. 
‘‘(3) CERTAIN RULES TO APPLY.—Rules similar 
to the following rules shall apply for purposes of this 
section: 
‘‘(A) Section 220(f)(8) (relating to treat-
ment after death of account holder). 
‘‘(B) Section 408(e)(2) (relating to loss of 
exemption of account where individual engages 
in prohibited transaction).
‘‘(C) Section 408(e)(4) (relating to effect 
of pledging account as security). 
‘‘(D) Section 408(g) (relating to commu-
nity property laws). 
‘‘(E) Section 408(h) (relating to custodial 
accounts). 
‘‘(4) TIME WHEN PAYMENTS DEEMED MADE.— 
For purposes of this section, a taxpayer shall be 
deemed to have made a payment to a FFARRM Ac-
count on the last day of a taxable year if such pay-
ment is made on account of such taxable year and 
is made on or before the due date (without regard 
to extensions) for filing the return of tax for such 
taxable year. 
‘‘(5) INDIVIDUAL.—For purposes of this sec-
tion, the term ‘individual’ shall not include an estate 
or trust. 
‘‘(6) DEDUCTION NOT ALLOWED FOR SELF-EM-
PLOYMENT TAX.—The deduction allowable by reason 
of subsection (a) shall not be taken into account in 
determining an individual’s net earnings from self- 
employment (within the meaning of section 1402(a)) 
for purposes of chapter 2. 
‘‘(g) REPORTS.—The trustee of a FFARRM Account 
shall make such reports regarding such Account to the
Secretary and to the person for whose benefit the Account 
is maintained with respect to contributions, distributions, 
and such other matters as the Secretary may require 
under regulations. The reports required by this subsection 
shall be filed at such time and in such manner and fur-
nished to such persons at such time and in such manner 
as may be required by such regulations.’’. 
(b) TAX ON EXCESS CONTRIBUTIONS.— 
(1) Subsection (a) of section 4973 (relating to 
tax on excess contributions to certain tax-favored ac-
counts and annuities) is amended by striking ‘‘or’’ 
at the end of paragraph (4), by redesignating para-
graph (5) as paragraph (6), and by inserting after 
paragraph (4) the following new paragraph: 
‘‘(5) a FFARRM Account (within the meaning 
of section 468C(d)), or’’. 
(2) Section 4973 is amended by adding at the 
end the following new subsection: 
‘‘(h) EXCESS CONTRIBUTIONS
TO FFARRM AC-
COUNTS.—For purposes of this section, in the case of a 
FFARRM Account (within the meaning of section 
468C(d)), the term ‘excess contributions’ means the 
amount by which the amount contributed for the taxable 
year to the Account exceeds the amount which may be con-
tributed to the Account under section 468C(b) for such
taxable year. For purposes of this subsection, any con-
tribution which is distributed out of the FFARRM Ac-
count in a distribution to which section 468C(e)(2)(B) ap-
plies shall be treated as an amount not contributed.’’. 
(3) The section heading for section 4973 is 
amended to read as follows: 
‘‘SEC. 4973. EXCESS CONTRIBUTIONS TO CERTAIN AC-
COUNTS, ANNUITIES, ETC.’’. 
(4) The table of sections for chapter 43 is 
amended by striking the item relating to section 
4973 and inserting the following new item: 
‘‘Sec. 4973. Excess contributions to certain accounts, annuities, 
etc.’’. 
(c) TAX ON PROHIBITED TRANSACTIONS.— 
(1) Subsection (c) of section 4975 (relating to 
tax on prohibited transactions) is amended by add-
ing at the end the following new paragraph: 
‘‘(7) SPECIAL RULE FOR FFARRM ACCOUNTS.— 
A person for whose benefit a FFARRM Account 
(within the meaning of section 468C(d)) is estab-
lished shall be exempt from the tax imposed by this 
section with respect to any transaction concerning 
such account (which would otherwise be taxable 
under this section) if, with respect to such trans-
action, the account ceases to be a FFARRM Ac-
count by reason of the application of section 
468C(f)(3)(A) to such account.’’. 
(2) Paragraph (1) of section 4975(e) is amend-
ed by redesignating subparagraphs (F) and (G) as 
subparagraphs (G) and (H), respectively, and by in-
serting after subparagraph (E) the following new 
subparagraph: 
‘‘(F) a FFARRM Account described in 
section 468C(d),’’. 
(d) FAILURE TO PROVIDE REPORTS ON FFARRM 
ACCOUNTS.—Paragraph (2) of section 6693(a) (relating 
to failure to provide reports on certain tax-favored ac-
counts or annuities) is amended by redesignating subpara-
graphs (D) and (E) as subparagraphs (E) and (F), respec-
tively, and by inserting after subparagraph (C) the fol-
lowing new subparagraph: 
‘‘(D) 
section 
468C(g) 
(relating 
to 
FFARRM Accounts),’’. 
(e) CLERICAL AMENDMENT.—The table of sections 
for subpart C of part II of subchapter E of chapter 1 is 
amended by inserting after the item relating to section 
468B the following new item: 
‘‘Sec. 468C. Farm, Fishing and Ranch Risk Management Ac-
counts.’’.
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 3. EXCLUSION OF RENTAL INCOME FROM SELF-EM-
PLOYMENT TAX. 
(a) 
INTERNAL
REVENUE
CODE.—Section 
1402(a)(1)(A) (relating to net earnings from self-employ-
ment) is amended by striking ‘‘an arrangement’’ and in-
serting ‘‘a written lease agreement’’. 
(b) SOCIAL SECURITY ACT.—Section 211(a)(1)(A) of 
the Social Security Act is amended by striking ‘‘an ar-
rangement’’ and inserting ‘‘a written lease agreement’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 4. EXCLUSION OF CONSERVATION RESERVE PRO-
GRAM PAYMENTS FROM SELF-EMPLOYMENT 
TAX. 
(a) INTERNAL REVENUE CODE.—Section 1402(a)(1) 
(relating to net earnings from self-employment) is amend-
ed by inserting ‘‘and including payments under section 
1233(2) of the Food Security Act of 1985 (16 U.S.C. 
3833(2))’’ after ‘‘crop shares’’. 
(b) SOCIAL SECURITY ACT.—Section 211(a)(1) of 
the Social Security Act is amended by inserting ‘‘and in-
cluding payments under section 1233(2) of the Food Secu-
rity Act of 1985 (16 U.S.C. 3833(2))’’ after ‘‘crop 
shares’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to payments made after the date 
of the enactment of this Act. 
SEC. 5. EXEMPTION OF AGRICULTURAL BONDS FROM PRI-
VATE ACTIVITY BOND VOLUME LIMITS. 
(a) IN GENERAL.—Section 146(g) (relating to excep-
tion for certain bonds) is amended by striking ‘‘and’’ at 
the end of paragraph (3), by striking the period at the 
end of paragraph (4) and inserting ‘‘, and’’, and by insert-
ing after paragraph (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. 6. MODIFICATIONS TO SECTION 512(b)(13). 
(a) IN GENERAL.—Paragraph (13) of section 512(b) 
(relating to special rules for certain amounts received from 
controlled entities) is amended by redesignating subpara-
graph (E) as subparagraph (F) and by inserting after sub-
paragraph (D) the following new subparagraph:
‘‘(E) PARAGRAPH TO APPLY ONLY TO EX-
CESS PAYMENTS.— 
‘‘(i) IN GENERAL.—Subparagraph (A) 
shall apply only to the portion of a speci-
fied payment received or accrued by the 
controlling organization that exceeds the 
amount which would have been paid or ac-
crued if such payment met the require-
ments prescribed under section 482. 
‘‘(ii) ADDITION
TO
TAX
FOR
VALU-
ATION MISSTATEMENTS.—The tax imposed 
by this chapter on the controlling organiza-
tion shall be increased by an amount equal 
to 20 percent of the larger of— 
‘‘(I) such excess determined with-
out regard to any amendment or sup-
plement to a return of tax, or 
‘‘(II) such excess determined 
with regard to all such amendments 
and supplements.’’. 
(b) EFFECTIVE DATE.— 
(1) IN
GENERAL.—The amendment made by 
this section shall apply to payments received or ac-
crued after December 31, 2000.
(2) PAYMENTS SUBJECT TO BINDING CONTRACT 
TRANSITION
RULE.—If the amendments made by 
section 1041 of the Taxpayer Relief Act of 1997 did 
not apply to any amount received or accrued in the 
first 2 taxable years beginning on or after the date 
of the enactment of the Taxpayer Relief Act of 1997 
under any contract described in subsection (b)(2) of 
such section, such amendments also shall not apply 
to amounts received or accrued under such contract 
before January 1, 2001. 
SEC. 7. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF 
FOOD INVENTORY. 
(a) IN GENERAL.—Subsection (e) of section 170 (re-
lating to certain contributions of ordinary income and cap-
ital gain property) is amended by adding at the end the 
following new paragraph: 
‘‘(7) APPLICATION OF PARAGRAPH (3) TO CER-
TAIN
CONTRIBUTIONS
OF
FOOD
INVENTORY.—For 
purposes of this section— 
‘‘(A) EXTENSION TO INDIVIDUALS.—In the 
case of a charitable contribution of apparently 
wholesome food— 
‘‘(i) paragraph (3)(A) shall be applied 
without regard to whether the contribution 
is made by a C corporation, and
‘‘(ii) in the case of a taxpayer other 
than a C corporation, the aggregate 
amount of such contributions from any 
trade or business (or interest therein) of 
the taxpayer for any taxable year which 
may be taken into account under this sec-
tion shall not exceed 10 percent of the tax-
payer’s net income from any such trade or 
business, computed without regard to this 
section, for such taxable year. 
‘‘(B) LIMITATION ON REDUCTION.—In the 
case of a charitable contribution of apparently 
wholesome food, notwithstanding paragraph 
(3)(B), the amount of the reduction determined 
under paragraph (1)(A) shall not exceed the 
amount by which the fair market value of such 
property exceeds twice the basis of such prop-
erty. 
‘‘(C) DETERMINATION
OF
BASIS.—If a 
taxpayer— 
‘‘(i) does not account for inventories 
under section 471, and 
‘‘(ii) is not required to capitalize indi-
rect costs under section 263A,
the taxpayer may elect, solely for purposes of 
paragraph (3)(B), to treat the basis of any ap-
parently wholesome food as being equal to 25 
percent of the fair market value of such food. 
‘‘(D) DETERMINATION
OF
FAIR
MARKET 
VALUE.—In the case of a charitable contribu-
tion of apparently wholesome food which is a 
qualified contribution (within the meaning of 
paragraph (3), as modified by subparagraph 
(A) of this paragraph) and which, solely by rea-
son of internal standards of the taxpayer or 
lack of market, cannot or will not be sold, the 
fair market value of such contribution shall be 
determined— 
‘‘(i) without regard to such internal 
standards or such lack of market and 
‘‘(ii) by taking into account the price 
at which the same or substantially the 
same food items (as to both type and qual-
ity) are sold by the taxpayer at the time of 
the contribution (or, if not so sold at such 
time, in the recent past). 
‘‘(E) APPARENTLY WHOLESOME FOOD.— 
For purposes of this paragraph, the term ‘ap-
parently wholesome food’ has the meaning given
such term by section 22(b)(2) of the Bill Emer-
son Good Samaritan Food Donation Act (42 
U.S.C. 1791(b)(2)), as in effect on the date of 
the enactment of this paragraph.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to contributions made after the 
date of the enactment of this Act. 
SEC. 8. COORDINATE FARMERS AND FISHERMEN INCOME 
AVERAGING AND THE ALTERNATIVE MIN-
IMUM TAX. 
(a) IN GENERAL.—Section 55(c) (defining regular 
tax) is amended by redesignating paragraph (2) as para-
graph (3) and by inserting after paragraph (1) the fol-
lowing new paragraph: 
‘‘(2) COORDINATION WITH INCOME AVERAGING 
FOR
FARMERS
AND
FISHERMEN.—Solely for pur-
poses of this section, section 1301 (relating to aver-
aging of farm and fishing income) shall not apply in 
computing the regular tax.’’. 
(b) ALLOWING INCOME AVERAGING
FOR FISHER-
MEN.— 
(1) IN GENERAL.—Section 1301(a) is amended 
by striking ‘‘farming business’’ and inserting ‘‘farm-
ing business or fishing business’’. 
(2) DEFINITION OF ELECTED FARM INCOME.—