To amend the Internal Revenue Code of 1986 to provide special rules for the exchange or installment sale of certain agricultural property.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Farmers Tax Deferral Act''.

SEC. 2. NONTAXABLE EXCHANGE OF QUALIFIED AGRICULTURAL PROPERTY FOR REAL 
              PROPERTY.

    (a) In General.--Part III of subchapter O of chapter 1 of the 
Internal Revenue Code of 1986 (relating to common nontaxable exchanges) 
is amended by adding at the end the following new section:

``SEC. 1046. EXCHANGE OF QUALIFIED AGRICULTURAL PROPERTY FOR REAL 
              PROPERTY.

    ``(a) In General.--No gain or loss shall be recognized to a 
qualified person on the receipt of United States real property in 
exchange for any qualified agricultural property.
    ``(b) Qualified Person.--For purposes of this section, the term 
`qualified person' means--
            ``(1) any individual who has attained age 55 as of the date 
        that such real property is received,
            ``(2) any corporation if all of the outstanding stock of 
        such corporation is owned by one or more individuals described 
        in paragraph (1), and
            ``(3) any partnership, trust, or estate if all of the 
        beneficial interests in such partnership, trust, or estate are 
        owned by one or more individuals described in paragraph (1).
    ``(c) Qualified Agricultural Property.--The term `qualified 
agricultural property' means--
            ``(1) any single purpose agricultural or horticultural 
        structure (as defined in section 168(i)(13)) which was placed 
        in service by the taxpayer more than 20 years before the date 
        that such structure is transferred in the exchange described in 
        subsection (a), and
            ``(2) any real property, equipment, or fixtures which are 
        related in use to such structure.
    ``(d) United States Real Property.--For purposes of this section, 
the term `United States real property' means real property located in 
the United States.
    ``(e) Requirement That Property Be Identified and That Exchange Be 
Completed Not More Than 180 Days After Transfer of Exchanged 
Property.--For purposes of this section, any property received by the 
taxpayer shall be treated as property which is not real property if--
            ``(1) such property is not identified as property to be 
        received in the exchange on or before the day which is 45 days 
        after the date on which the taxpayer transfers the property 
        relinquished in the exchange, or
            ``(2) such property is received after the earlier of--
                    ``(A) the day which is 180 days after the date on 
                which the taxpayer transfers the property relinquished 
                in the exchange, or
                    ``(B) the due date (determined with regard to 
                extension) for the transferor's return of the tax 
                imposed by this chapter for the taxable year in which 
                the transfer of the relinquished property occurs.
    ``(f) Application of Rules Regarding Basis, Exchanges Not Solely in 
Kind, and Related Parties.--Rules similar to the rules of subsections 
(b), (c), (d), (f), and (g) of section 1031 shall apply for purposes of 
this section.
    ``(g) Treatment as Section 1031 Exchange.--For purposes of this 
title (other than sections 1031 and 1245), a transaction described in 
this section shall be treated in the same manner as a transaction 
described in section 1031.''.
    (b) Ordinary Income Recapture Deferred Until Disposition of Real 
Property Acquired in Exchange.--Subsection (b) of section 1245 of such 
Code is amended by adding at the end the following new paragraph:
            ``(9) Special rule for like kind exchanges of qualified 
        agricultural property.--
                    ``(A) In general.--If qualified agricultural 
                property (as defined in section 1046(c)) is disposed of 
                and gain (determined without regard to this section) is 
                not recognized in whole or in part under section 1046, 
                then the amount of gain taken into account by the 
                transferor under subsection (a)(1) shall not exceed the 
                sum of--
                            ``(i) the amount of gain recognized on such 
                        disposition (determined without regard to this 
                        section), plus
                            ``(ii) the fair market value of property 
                        acquired which is not taken into account under 
                        clause (i) and which is not--
                                    ``(I) section 1245 property, or
                                    ``(II) United States real property.
                    ``(B) Ordinary income recapture on disposition of 
                real property acquired in exchange.--If United States 
                real property acquired in an exchange to which section 
                1046 applies is disposed of by the transferee, the 
                lesser of--
                            ``(i) the excess of--
                                    ``(I) the amount realized on the 
                                disposition of such real property (in 
                                the case of a disposition other than a 
                                sale, exchange, or involuntary 
                                conversion, the fair market value of 
                                such real property), over
                                    ``(II) the adjusted basis of such 
                                real property, or
                            ``(ii) the excess of--
                                    ``(I) the amount of gain that would 
                                have been treated as ordinary income 
                                under this section if such qualified 
                                agricultural property were sold at fair 
                                market value on the date of the 
                                disposition of such qualified 
                                agricultural property, over
                                    ``(II) the amount of gain 
                                recognized as ordinary income under 
                                this subparagraph with respect to such 
                                qualified agricultural property on the 
                                disposition of any other real property,
        shall be treated as ordinary income. Such gain shall be 
        recognized notwithstanding any other provision of this 
        subtitle.''.
    (c) Effective Date.--
            (1) Subsection (a).--The amendments made by subsection (a) 
        shall apply to transfers after the date of the enactment of 
        this Act.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to dispositions after the date of the enactment of 
        this Act.

SEC. 3. SPECIAL RULES FOR INSTALLMENT SALES OF QUALIFIED AGRICULTURAL 
              PROPERTY.

    (a) In General.--Subsection (i) of section 453 of the Internal 
Revenue Code of 1986 is amended by redesignating paragraph (2) as 
paragraph (3) and by inserting after paragraph (1) the following new 
paragraph:
            ``(2) Special rule for qualified agricultural property.--
        Notwithstanding paragraph (1), in the case of any installment 
        sale of qualified agricultural property (as defined in section 
        1046(c), applied by substituting `the installment sale 
        described in section 453(i)(2)' for `the exchange described in 
        subsection (a)' in paragraph (1) thereof) to which subsection 
        (a) applies--
                    ``(A) income from the installment sale shall be 
                taken into account under the installment method, and
                    ``(B) income recognized for any taxable year from 
                such sale under such method shall be recognized as 
                recapture income in such year in the same proportion to 
                such income recognized for such year from such sale 
                as--
                            ``(i) the aggregate recapture income from 
                        such sale (recognized or to be recognized when 
                        payment is completed), bears to
                            ``(ii) the aggregate income from such sale 
                        (so recognized or to be recognized).''.
    (b) Conforming Amendment.--Paragraph (3) of section 453(i) of such 
Code, as redesignated under this section, is amended by striking 
``paragraph (1)'' and inserting ``this subsection''.
    (c) Effective Date.--The amendments made by this section shall 
apply to sales after the date of the enactment of this Act.

Summary: Farmers Tax Deferral Act - Amends the Internal Revenue Code to: (1) allow individuals age 55 or older to exclude from gross income the gain or loss from an exchange of qualified agricultural property for U.S. real property; (2) treat such an exchange as a like-kind exchange for purposes of recognizing gain or loss; and (3) allow installment sales treatment of qualified agricultural property. Defines "qualified agricultural property" as any single purpose agricultural or horticultural structure placed in service more than 20 years before an exchange and any real property, equipment, or fixtures related in use to such structure.