[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 317 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                 S. 317

To amend the Internal Revenue Code of 1986 to provide an exclusion for 
 gain from the sale of farmland which is similar to the exclusion from 
               gain on the sale of a principal residence.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 28, 1999

 Mr. Dorgan (for himself and Mr. Hagel) 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 an exclusion for 
 gain from the sale of farmland which is similar to the exclusion from 
               gain on the sale of a principal residence.

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

SECTION 1. EXCLUSION OF GAIN FROM SALE OF CERTAIN FARMLAND.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically excluded 
from gross income) is amended by adding after section 121 the following 
new section:

``SEC. 121A. EXCLUSION OF GAIN FROM SALE OF QUALIFIED FARM PROPERTY.

    ``(a) Exclusion.--In the case of a natural person, gross income 
shall not include gain from the sale or exchange of qualified farm 
property.
    ``(b) Limitation on Amount of Exclusion.--
            ``(1) In general.--The amount of gain excluded from gross 
        income under subsection (a) with respect to any taxable year 
        shall not exceed $500,000 ($250,000 in the case of a married 
        individual filing a separate return), reduced by the aggregate 
        amount of gain excluded under subsection (a) for all preceding 
        taxable years.
            ``(2) Special rule for joint returns.--The amount of the 
        exclusion under subsection (a) on a joint return for any 
        taxable year shall be allocated equally between the spouses for 
        purposes of applying the limitation under paragraph (1) for any 
        succeeding taxable year.
    ``(c) Qualified Farm Property.--
            ``(1) Qualified farm property.--For purposes of this 
        section, the term `qualified farm property' means real property 
        located in the United States if, during periods aggregating 3 
        years or more of the 5-year period ending on the date of the 
        sale or exchange of such real property--
                    ``(A) such real property was used as a farm for 
                farming purposes by the taxpayer or a member of the 
                family of the taxpayer, and
                    ``(B) there was material participation by the 
                taxpayer (or such a member) in the operation of the 
                farm.
            ``(2) Definitions.--For purposes of this subsection, the 
        terms `member of the family', `farm', and `farming purposes' 
        have the respective meanings given such terms by paragraphs 
        (2), (4), and (5) of section 2032A(e).
            ``(3) Special rules.--For purposes of this section, rules 
        similar to the rules of paragraphs (4) and (5) of section 
        2032A(b) and paragraphs (3) and (6) of section 2032A(e) shall 
        apply.
    ``(d) Other Rules.--For purposes of this section, rules similar to 
the rules of subsection (e) and subsection (f) of section 121 shall 
apply.''
    (b) Conforming Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by adding after the item relating to section 121 the following 
new item:

``Sec. 121A. Exclusion of gain from sale of qualified farm property.''
    (c) Effective Date.--The amendment made by this section shall apply 
to any sale or exchange on or after May 7, 1997, in taxable years 
ending after such date.
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