[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 331 Introduced in Senate (IS)]







104th CONGRESS
  1st Session
                                 S. 331

To amend the Internal Revenue Code of 1986 to provide for the rollover 
  of gain from the sale of farm assets into an individual retirement 
                                account.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             February 1 (legislative day, January 30), 1995

   Mr. Kohl 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 provide for the rollover 
  of gain from the sale of farm assets into an individual retirement 
                                account.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; REFERENCE TO INTERNAL REVENUE CODE.

    (a) Short Title.--This Act may be cited as the ``Family Farm 
Retirement Equity Act of 1995''.
    (b) Reference to Internal Revenue Code of 1986.--Except as 
otherwise expressly provided, whenever in this Act an amendment or 
repeal is expressed in terms of an amendment to, or repeal of, a 
section or other provision, the reference shall be considered to be 
made to a section or other provision of the Internal Revenue Code of 
1986.

SEC. 2. ROLLOVER OF GAIN FROM SALE OF FARM ASSETS TO INDIVIDUAL 
              RETIREMENT PLANS.

    (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 inserting after section 1034 the following new section:

``SEC. 1034A. ROLLOVER OF GAIN ON SALE OF FARM ASSETS INTO ASSET 
              ROLLOVER ACCOUNT.

    ``(a) Nonrecognition of Gain.--Subject to the limits of subsection 
(c), if a taxpayer has a qualified net farm gain from the sale of a 
qualified farm asset, then, at the election of the taxpayer, gain (if 
any) from such sale shall be recognized only to the extent such gain 
exceeds the contributions to 1 or more asset rollover accounts of the 
taxpayer for the taxable year in which such sale occurs.
    ``(b) Asset Rollover Account.--
            ``(1) General rule.--Except as provided in this section, an 
        asset rollover account shall be treated for purposes of this 
        title in the same manner as an individual retirement plan.
            ``(2) Asset rollover account.--For purposes of this title, 
        the term `asset rollover account' means an individual 
        retirement plan which is designated at the time of the 
        establishment of the plan as an asset rollover account. Such 
        designation shall be made in such manner as the Secretary may 
        prescribe.
    ``(c) Contribution Rules.--
            ``(1) No deduction allowed.--No deduction shall be allowed 
        under section 219 for a contribution to an asset rollover 
        account.
            ``(2) Aggregate contribution limitation.--Except in the 
        case of rollover contributions, the aggregate amount for all 
        taxable years which may be contributed to all asset rollover 
        accounts established on behalf of an individual shall not 
        exceed--
                    ``(A) $500,000 ($250,000 in the case of a separate 
                return by a married individual), reduced by
                    ``(B) the amount by which the aggregate value of 
                the assets held by the individual (and spouse) in 
                individual retirement plans (other than asset rollover 
                accounts) exceeds $100,000.
        The determination under subparagraph (B) shall be made as of 
        the close of the taxable year for which the determination is 
        being made.
            ``(3) Annual contribution limitations.--
                    ``(A) General rule.--The aggregate contribution 
                which may be made in any taxable year to all asset 
                rollover accounts shall not exceed the lesser of--
                            ``(i) the qualified net farm gain for the 
                        taxable year, or
                            ``(ii) an amount determined by multiplying 
                        the number of years the taxpayer is a qualified 
                        farmer by $10,000.
                    ``(B) Spouse.--In the case of a married couple 
                filing a joint return under section 6013 for the 
                taxable year, subparagraph (A) shall be applied by 
                substituting `$20,000' for `$10,000' for each year the 
                taxpayer's spouse is a qualified farmer.
            ``(4) Time when contribution deemed made.--For purposes of 
        this section, a taxpayer shall be deemed to have made a 
        contribution to an asset rollover account on the last day of 
        the preceding taxable year if the contribution is made on 
        account of such taxable year and is made not later than the 
        time prescribed by law for filing the return for such taxable 
        year (not including extensions thereof).
    ``(d) Qualified Net Farm Gain; Etc.--For purposes of this section--
            ``(1) Qualified net farm gain.--The term `qualified net 
        farm gain' means the lesser of--
                    ``(A) the net capital gain of the taxpayer for the 
                taxable year, or
                    ``(B) the net capital gain for the taxable year 
                determined by only taking into account gain (or loss) 
                in connection with a disposition of a qualified farm 
                asset.
            ``(2) Qualified farm asset.--The term `qualified farm 
        asset' means an asset used by a qualified farmer in the active 
        conduct of the trade or business of farming (as defined in 
        section 2032A(e)).
            ``(3) Qualified farmer.--
                    ``(A) In general.--The term `qualified farmer' 
                means a taxpayer who--
                            ``(i) during the 5-year period ending on 
                        the date of the disposition of a qualified farm 
                        asset materially participated in the trade or 
                        business of farming, and
                            ``(ii) owned (or who with the taxpayer's 
                        spouse owned) 50 percent or more of such trade 
                        or business during such 5-year period.
                    ``(B) Material participation.--For purposes of this 
                paragraph, a taxpayer shall be treated as materially 
                participating in a trade or business if the taxpayer 
                meets the requirements of section 2032A(e)(6).
            ``(4) Rollover contributions.--Rollover contributions to an 
        asset rollover account may be made only from other asset 
        rollover accounts.
    ``(e) Distribution Rules.--For purposes of this title, the rules of 
paragraphs (1) and (2) of section 408(d) shall apply to any 
distribution from an asset rollover account.
    ``(f) Individual Required To Report Qualified Contributions.--
            ``(1) In general.--Any individual who--
                    ``(A) makes a contribution to any asset rollover 
                account for any taxable year, or
                    ``(B) receives any amount from any asset rollover 
                account for any taxable year,
        shall include on the return of tax imposed by chapter 1 for 
        such taxable year and any succeeding taxable year (or on such 
        other form as the Secretary may prescribe) information 
        described in paragraph (2).
            ``(2) Information required to be supplied.--The information 
        described in this paragraph is information required by the 
        Secretary which is similar to the information described in 
        section 408(o)(4)(B).
            ``(3) Penalties.--For penalties relating to reports under 
        this paragraph, see section 6693(b).''.
    (b) Contributions Not Deductible.--Section 219(d) of the Internal 
Revenue Code of 1986 (relating to other limitations and restrictions) 
is amended by adding at the end the following new paragraph:
            ``(5) Contributions to asset rollover accounts.--No 
        deduction shall be allowed under this section with respect to a 
        contribution under section 1034A.''.
    (c) Excess Contributions.--
            (1) In general.--Section 4973 of the Internal Revenue Code 
        of 1986 (relating to tax on excess contributions to individual 
        retirement accounts, certain section 403(b) contracts, and 
        certain individual retirement annuities) is amended by adding 
        at the end the following new subsection:
    ``(d) Asset Rollover Accounts.--For purposes of this section, in 
the case of an asset rollover account referred to in subsection (a)(1), 
the term `excess contribution' means the excess (if any) of the amount 
contributed for the taxable year to such account over the amount which 
may be contributed under section 1034A.''.
            (2) Conforming amendments.--
                    (A) Section 4973(a)(1) of such Code is amended by 
                striking ``or'' and inserting ``an asset rollover 
                account (within the meaning of section 1034A), or''.
                    (B) The heading for section 4973 of such Code is 
                amended by inserting ``asset rollover accounts,'' after 
                ``contracts''.
                    (C) The table of sections for chapter 43 of such 
                Code is amended by inserting ``asset rollover 
                accounts,'' after ``contracts'' in the item relating to 
                section 4973.
    (d) Technical Amendments.--
            (1) Paragraph (1) of section 408(a) of the Internal Revenue 
        Code of 1986 (defining individual retirement account) is 
        amended by inserting ``or a qualified contribution under 
        section 1034A,'' before ``no contribution''.
            (2) Subparagraph (A) of section 408(d)(5) of such Code is 
        amended by inserting ``or qualified contributions under section 
        1034A'' after ``rollover contributions''.
            (3)(A) Subparagraph (A) of section 6693(b)(1) of such Code 
        is amended by inserting ``or 1034A(f)(1)'' after ``408(o)(4)''.
            (B) Section 6693(b)(2) of such Code is amended by inserting 
        ``or 1034A(f)(1)'' after ``408(o)(4)''.
            (4) The table of sections for part III of subchapter O of 
        chapter 1 of such Code is amended by inserting after the item 
        relating to section 1034 the following new item:

                              ``Sec. 1034A. Rollover of gain on sale of 
                                        farm assets into asset rollover 
                                        account.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to sales and exchanges after the date of the enactment of this 
Act.
                                 <all>