[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 545 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 545

     To amend the Internal Revenue Code of 1986 to allow farmers' 
     cooperatives to elect to include gains or losses from certain 
   dispositions in the determination of net earnings, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

               March 10 (legislative day, March 3), 1993

    Mr. Boren (for himself, Mr. Dole, Mr. Danforth, and Mr. Dorgan) 
introduced the following bill; which was read twice and referred to the 
                          Committee on Finance

_______________________________________________________________________

                                 A BILL


 
     To amend the Internal Revenue Code of 1986 to allow farmers' 
     cooperatives to elect to include gains or losses from certain 
   dispositions in the determination of net earnings, 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. GAINS AND LOSSES FROM CERTAIN DISPOSITIONS BY FARMERS 
              COOPERATIVES.

    (a) In General.--Section 1388 of the Internal Revenue Code of 1986 
(relating to definitions and special rules) is amended by adding at the 
end thereof the following new subsection:
    ``(k) Treatment of Gains or Losses on the Disposition of Certain 
Assets.--For purposes of this title, in the case of any farmer 
cooperative--
            ``(1) In general.--A farmer cooperative may elect to 
        include gain or loss from the sale or other disposition of any 
        asset (including stock or any other ownership or financial 
        interest in another entity) in net earnings of the organization 
        from business done with or for patrons, if such asset was used 
        by the organization to facilitate the conduct of business done 
        with or for patrons.
            ``(2) Allocation.--An election under paragraph (1) shall 
        not apply to gain or loss on the sale or other disposition of 
        any asset to the extent that such asset was used for purposes 
        other than to facilitate the conduct of business done with or 
        for patrons. For purposes of this paragraph, the extent of such 
        use may be determined on the basis of any reasonable method for 
        making allocations of income or expense between patronage and 
        nonpatronage operations.
            ``(3) Period of election.--An election under paragraph (1) 
        shall apply to the taxable year for which made and all 
        subsequent taxable years unless revoked by the organization. 
        Any such revocation shall be effective for taxable years 
        beginning after the date on which notice of the revocation is 
        filed with the Secretary.
            ``(4) Election after revocation.--If an organization has 
        made an election under paragraph (1) and such election has been 
        revoked under paragraph (3), such organization shall not be 
        eligible to make an election under paragraph (1) for any 
        taxable year before its 3rd taxable year which begins after the 
        1st taxable year for which such revocation is effective, unless 
        the Secretary consents to such election.
            ``(5) Coordination with section 1231.--If an organization 
        has made an election under paragraph (1), section 1231 shall be 
        applied separately with respect to both patronage-sourced gains 
        and losses and nonpatronage-sourced gains and losses.
            ``(6) Farmer cooperative.--For purposes of this subsection, 
        the term `farmer cooperative' means any farmers', fruit 
        growers', or like association to which subpart I of this 
        subchapter applies.
            ``(7) No inference.--Nothing in this subsection shall be 
        construed to infer that a change in the law is intended for 
        farmer cooperatives not having in effect an election under 
        paragraph (1) or other organizations. Any gain or loss from the 
        sale or other disposition of any asset by such organization 
        shall be treated as if this subsection had not been enacted.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to sales or other dispositions in taxable years beginning after 
the date of the enactment of this Act.

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