Payment-in-Kind Tax Treatment Act of 1983
PL 98-4 (H.R.1296), enacted 03/11/1983

PUBLIC LAW 98-4—MAR. 11, 1983 
97 STAT. 7 
Public Law 98-4 
98th Congress 
An Act 
Relating to the treatment for income and estate tax purposes of commodities 
received under 1983 payment-in-kind programs, and for other purposes. 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the "Payment-in-Kind Tax Treatment 
Act of 1983". 
SEC. 2. INCOME TAX TREATMENT OF AGRICULTURAL COMMODITIES 
RECEIVED UNDER A 1983 PAYMENT-IN-KIND PROGRAM. 
(a) INCOME TAX DEFERRAL, ETC.—Except as otherwise provided in 
this Act, for purposes of the Internal Revenue Code of 1954— 
(1) a qualified taxpayer shall not be treated as having realized 
income when he receives a commodity under a 1983 payment-in-
kind program, 
(2) such commodity shall be treated as if it were produced by 
such taxpayer, and 
(3) the unadjusted basis of such commodity in the hands of 
such taxpayer shall be zero. 
(b) EFFECTIVE DATE.—This section shall apply to taxable years 
ending after December 31, 1982, but only with respect to commod-
ities received for the 1983 crop year. 
SEC. 3. LAND DIVERTED UNDER 1983 PAYMENT-IN-KIND PROGRAM 
TREATED AS USED IN FARMING BUSINESS, ETC. 
(a) GENERAL RULE.—For purposes of the provisions specified in 
subsection (b), in the case of any land diverted from the production 
of an agricultural commodity under a 1983 pajmient-in-kind 
program— 
(1) such land shall be treated as used during the 1983 crop 
year by the qualified taxpayer in the active conduct of the trade 
or business of farming, and 
(2) any qualified taxpayer who materially participates in the 
diversion and devotion to conservation uses required under a 
1983 pajrment-in-kind program shall be treated as materially 
participating in the operation of such land during such crop 
year. 
(b) PROVISIONS TO WHICH SUBSECTION (a) APPLIES.—The provisions 
specified in this subsection are— 
(1) section 2032A of the Internal Revenue Code of 1954 (relat-
ing to valuation of certain farm, etc., real property), 
(2) section 6166 of such Code (relating to extension of time for 
pa3anent of estate tax where estate consists largely of interest in 
closely held business), 
(3) chapter 2 of such Code (relating to tax on self-employment 
income), and 
Mar. 11, 1983 
[H.R. 1296] 
Payment-in-Kind 
Tax Treatment 
Act of 1983. 
26 use 61 note. 
26 u s e 61 note. 
26 use 1 et seq. 
26 use 61 note. 
26 use 2032A. 
26 u s e 6166. 
26 use 1401 et 
seq. 
97 STAT. 8 
PUBLIC LAW 98-4—MAR. 11, 1983 
42 use 401. 
(4) title II of the Social Security Act (relating to Federal old-
age, survivors, and disability insurance benefits). 
26 use 61 note. 
SEC. 4. ANTIABUSE RULES. 
(a) GENERAL RULE.—In the case of any person, sections 2 and 3 of 
this Act shall not apply with respect to any land acquired by such 
person after February 23, 1983, unless such land was acquired in a 
qualified acquisition. 
(b) QuAUFiED ACQUISITION.—For purposes of this section, the term 
"qualified acquisition" means any acquisition— 
(1) by reason of the death of a qualified transferor, 
(2) by reason of a gift from a qualified transferor, or 
(3) from a qualified transferor who is a member of the family 
of the person acquiring the land. 
(c) DEFINITIONS AND SPECIAL RULES.—For purposes of this 
section— 
(1) QUAUFIED TRANSFEROR.—The term "qualified transferor" 
means any person— 
(A) who held the land on February 23,1983, or 
(B) who acquired the land after February 23, 1983, in a 
qualified acquisition. 
(2) MEMBER OF FAMILY.—The term "member of the family" 
has the meaning given such term by section 2032A(eX2) of the 
26 use 2032A. 
Internal Revenue Code of 1954. 
(3) MERE CHANGE IN FORM OF BUSINESS.—Subsection (a) shall 
not apply to any change in ownership by reason of a mere 
change in the form of conducting the trade or business so long 
as the land is retained in such trade or business and the person 
holding the land before such change retains a direct or indirect 
80-percent interest in such land. 
(4) TREATMENT OF CERTAIN ACQUISITIONS OP RIGHT TO THE 
CROP.—The acquisition of a direct or indirect interest in 80 
percent or more of the crop from any land shall be treated as an 
acquisition of such land. 
26 use 61 note. 
SEC. 5. DEFINITIONS AND SPECIAL RULES. 
(a) GENERAL RULE.—For purposes of this Act— 
(1) 1983 PAYMENT-IN-KIND PROGRAM.—The term "1983 pay-
ment-in-kind program" means any program for the 1983 crop 
year— 
(A) under which the Secretary of Agriculture (or his 
delegate) makes payments in kind of any agricultural com-
modity to any person in return for— 
(i) the diversion of farm acreage from the production 
of an agricultural commodity, and 
(ii) the devotion of such acreage to conservation uses, 
and 
(B) which the Secretary of Agriculture certifies to the 
Secretary of the Treasury as being described in subpara-
graph (A). 
(2) 1983 CROP YEAR.—The term "1983 crop year" means the 
crop year for any crop the harvesting or planting period for 
which occurs during 1983. 
(3) QUAUFIED TAXPAYER.—The term "qualified taxpayer" 
means any producer of agricultural commodities (within the 
meaning of the 1983 payment-in-kind programs) who receives 
PUBLIC LAW 98-4—MAR. 11, 1983 
97 STAT. 9 
any agricultural commodity in return for meeting the require-
ments of clauses (i) and (ii) of paragraph (1)(A). 
(4) RECEIPT INCLUDES RIGHT TO RECEIVE, ETC.—A right to 
receive (or other constructive receipt of) a commodity shall be 
treated the same as actual receipt of such commodity. 
(5) AMOUNTS RECEIVED BY THE TAXPAYER AS REIMBURSEMENT 
F
O
R STORAGE.—A qualified taxpayer reporting on the cash 
receipts and disbursements method of accounting shall not be 
treated as being entitled to receive any amount as reimburse-
ment for storage of commodities received under a 1983 pay-
ment-in-kind program until such amount is actually received by 
the taxpayer. 
(6) COMMODITY CREDIT LOANS TREATED SEPARATELY.—Subsec-
tion (a) of section 2 shall apply to the receipt of any commodity 
under a 1983 pajonent-in-kind program separately from, and 
without taking into account, any related transaction or series of 
transactions involving the satisfaction of loans from the Com-
modity Credit Corporation. 
(b) REGULATIONS.—The Secretary of the Treasury or his delegate 
(after consultation with the Secretary of Agriculture) shall prescribe 
such regulations as may be necessary to carry out the purposes of 
this Act, including (but not limited to) such regulations as may be 
necessary to carry out the purposes of this Act where the commodity 
is received by a cooperative on behalf of the qualified taxpayer. 
SEC. 6. STUDY. 
26 USC 61 note. 
(a) GENERAL RULE.—The Secretary of the Treasury or his delegate, 
after consultation with the Secretary of Agriculture, shall conduct a 
study o
f
— 
(1) the 1983 payment-in-kind program, and 
(2) the tax treatment provided with respect to such program 
by this Act. 
(b) REPORT.—Not later than September 1, 1983, the Secretary of 
the Treasury sheQl submit to the Congress a report on the study 
conducted under subsection (a), together with such recommenda-
tions as he may deem advisable. 
Approved March 11, 1988. 
LEGISLATIVE HISTORY—H.R. 1296 (S. 690): 
HOUSE REPORT: No. 98-14 (Comm. on Ways and Means). 
CONGRESSIONAL RECORD, Vol. 129 (1983): 
Mar. 8, considered and passed House; considered and passed Senate, amended. 
Mar. 9, House concurred in Senate amendment with an amendment. 
Mar. 10, Senate concurred in House amendment.