[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 2467 Introduced in Senate (IS)]

  2d Session
                                S. 2467

 To amend the Internal Revenue Code of 1986 to increase the years for 
       carryback of net operating losses for certain farm losses.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 14, 1998

Mr. Harkin (for himself and Mr. Johnson) 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 increase the years for 
       carryback of net operating losses for certain farm losses.

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

SECTION 1. NET OPERATING LOSS OF FARMERS.

    (a) Increase in Carryback Years.--Paragraph (1) of section 172(b) 
of the Internal Revenue Code of 1986 (relating to net operating loss 
carrybacks and carryforwards) is amended by adding at the end the 
following new subparagraph:
                    ``(G) Farming losses.--Subparagraph (A)(i) shall be 
                applied by substituting `10 years' for `2 years' with 
                respect to the portion of the net operating loss of an 
                eligible taxpayer (as defined in subsection (i)) for 
                any taxable year beginning after December 31, 1997, and 
                ending before January 1, 2000, which is a farming loss 
                (as so defined) with respect to the taxpayer.''
    (b) Definitions and Rules Relating to Farming Losses.--Section 172 
of such Code is amended by redesignating subsection (i) as subsection 
(j) and inserting after subsection (h) the following new subsection:
    ``(i) Definitions and Rules Relating to Farming Losses.--For 
purposes of this section--
            ``(1) Farming loss.--
                    ``(A) In general.--The term `farming loss' means 
                the lesser of--
                            ``(i) the net operating loss of the 
                        taxpayer for the taxable year, or
                            ``(ii) the net operating loss of the 
                        taxpayer for the taxable year determined by 
                        only taking into account items of income and 
                        deduction attributable to 1 or more qualified 
                        farming businesses of the taxpayer.
                    ``(B) Dollar limitation.--
                            ``(i) In general.--The farming loss of a 
                        taxpayer for any taxable year shall not exceed 
                        $200,000.
                            ``(ii) Aggregation rules.--
                                    ``(I) In general.--All persons 
                                treated as 1 employer under subsections 
                                (a) or (b) of section 52 shall be 
                                treated as 1 person.
                                    ``(II) Pass-thru entity.--In the 
                                case of a partnership, trust, or other 
                                pass-thru entity, the limitation shall 
                                be applied at both the entity and the 
                                owner level.
                                    ``(III) Owner.--The limitation 
                                shall be reduced by the amount of 
                                farming loss determined for a 
                                corporation for which the taxpayer is a 
                                50 percent owner in the taxable year of 
                                the corporation ending in the taxable 
                                year of the taxpayer owner.
            ``(2) Eligible taxpayer.--
                    ``(A) In general.--The term `eligible taxpayer' 
                means a taxpayer which derives more than 50 percent of 
                its gross income for the 3-year period beginning 2 
                years prior to the current taxable year from qualified 
                farming businesses.
                    ``(B) Qualified farming business.--The term 
                `qualified farming business' means a trade or business 
                of farming (within the meaning of section 2032A)--
                            ``(i) with respect to which--
                                    ``(I) the taxpayer or a member of 
                                the family of the taxpayer materially 
                                participates (within the meaning of 
                                section 2032A(e)(6)), or
                                    ``(II) in the case of a taxpayer 
                                other than an individual, a 20 percent 
                                owner of the taxpayer or a member of 
                                the owner's family materially 
                                participates (as so defined), and
                            ``(ii) which does not receive in excess of 
                        $7,000,000 from sales in a taxable year.
                For purposes of clause (i)(II), owners which are 
                members of a single family shall be treated as a single 
                owner.
            ``(3) Owner.--
                    ``(A) 20 percent owner.--The term `20 percent 
                owner' means any person who would be described in 
                section 416(i)(1)(B)(i) if `20 percent' were 
                substituted for `5 percent' each place it appears in 
                such section.
                    ``(B) 50 percent owner.--The term `50 percent 
                owner' means any person who would be described in 
                section 416(i)(1)(B)(i) if `50 percent' were 
                substituted for `5 percent' each place it appears in 
                such section.
            ``(4) Coordination with subsection (b)(2).--For purposes of 
        applying subsection (b)(2), a farming loss for any taxable year 
        shall be treated as a separate net operating loss for such 
        taxable year to be taken into account after the remaining 
        portion of the net operating loss for such taxable year.
            ``(5) Election.--Any taxpayer entitled to a 10-year 
        carryback under subsection (b)(1)(G) from any loss year may 
        elect to have the carryback period with respect to such loss 
        year, and any portion of the farming loss for such year, 
        determined without regard to subsection (b)(1)(G). Such 
        election shall be made in such manner as may be prescribed by 
        the Secretary and shall be made by the due date (including 
        extensions of time) for filing the taxpayer's return for the 
        taxable year of the net operating loss. Such election, once 
        made for any taxable year, shall be irrevocable for that 
        taxable year.''
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