[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1179 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 1179
To amend the Internal Revenue Code of 1986 to exclude from gross income
gain on the sale of a family farming business to a family member.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 22, 2001
Mr. Green of Wisconsin (for himself, Mr. Petri, Mr. Baker, Mr. Johnson
of Illinois, Mr. Weldon of Pennsylvania, Mr. Schaffer, Mr. Hostettler,
Mr. Gilman, Mr. Istook, Mr. Burton of Indiana, Mr. Barton of Texas, Mr.
Hilleary, Mr. Shows, Mr. McHugh, Ms. Hart, Mr. Sweeney, Mr. Pombo, Mr.
Ryun of Kansas, Mr. Nethercutt, Mr. Terry, Mr. Hastings of Washington,
Mr. Sensenbrenner, Mr. Weller, Mr. Skeen, Mr. Kennedy of Minnesota, Mr.
Pomeroy, and Mr. Fletcher) introduced the following bill; which was
referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to exclude from gross income
gain on the sale of a family farming business to a family member.
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 ``Family Farm Protection Act''.
SEC. 2. EXCLUSION OF GAIN ON SALE OF FAMILY FARMING BUSINESS TO FAMILY
MEMBER.
(a) In General.--Part I of subchapter P of chapter 1 of the
Internal Revenue Code of 1986 (relating to treatment of capital gains)
is amended by adding at the end the following new section:
``SEC. 1203. EXCLUSION OF GAIN ON SALE OF FAMILY FARM TO FAMILY MEMBER.
``(a) In General.--At the election of the taxpayer, gross income
shall not include any gain from the sale of a qualified family farm
interest to a member of the taxpayer's family if--
``(1) at all times during the 5-year period ending on the
date of such sale, there was material participation by the
taxpayer or a member of the taxpayer's family in the operation
of the farming business to which such interest relates, and
``(2)(A) such interest is being acquired by a member of the
taxpayer's family, and
``(B) such member agrees--
``(i) for the 5-year period beginning on the day
after the date of such sale, to materially participate
in the operation of the farming business to which such
interest relates, and
``(ii) to the provisions of subsection (b).
``(b) Recapture of Tax if Interest Ceases To Be Used in a Farming
Business.--
``(1) In general.--If, during any year within the 5-year
period beginning on the date of such sale--
``(A) a qualified family farm interest with respect
to which an election is made under subsection (a) is
disposed of, or otherwise ceases to be a qualified
family farm interest of the member of the family who
acquired such interest, other than through the
bankruptcy or insolvency of such member of the family,
or
``(B) the member of the family who acquired such
interest fails to materially participate (directly or
through a family member of such member) in the
operation of the farming business to which such
interest relates,
then the tax imposed on such member of the family under this
subtitle for the year shall be increased by an amount equal to
the recapture percentage of the excluded tax amount, plus
interest on the amount of such increase at the underpayment
rate established under section 6621 for the period beginning on
the date the return of tax for the year of such sale was due
under this chapter (without regard to extensions thereof) and
ending on the date the increase in tax under this subsection is
due (without regard to extensions thereof).
``(2) Recapture percentage.--For purposes of paragraph (1),
the recapture percentage shall be determined under the
following table:
``If the event described
in paragraph (1) occurs
in the following years The recapture
after such sale: percentage is:
1..........................
100
2..........................
80
3..........................
60
4..........................
40
5..........................
20.
``(3) Excluded tax amount.--For purposes of paragraph (1),
the term `excluded tax amount' means the excess of--
``(A) the amount of tax that would have been
imposed on the taxpayer under this subtitle for the
taxable year ending with or within which the sale for
which an election was made under subsection (a), over
``(B) the amount of tax imposed on the taxpayer
under this subtitle for such taxable year.
This paragraph shall be applied without regard to the
installment method of accounting or averaging of farm income
under section 1301.
``(c) Definitions.--For purposes of this section--
``(1) Qualified family farm interest.--The term `qualified
family farm interest' means an interest which is a qualified
family-owned business interest in a farming business.
``(2) Qualified family-owned business interest.--The term
`qualified family-owned business interest' has the meaning
given such term by section 2057(e), determined by substituting
`taxpayer' for `decedent' each place it appears.
``(3) Farming business.--The term `farming business' has
the meaning given such term by section 263A(e)(4).
``(4) Member of the family.--The term `member of the
family' has the meaning given such term by section 2032A(e).
``(5) Material participation.--The term `material
participation' has the meaning given such term by section
2032A(e)(6).''.
(b) Clerical Amendment.--The table of sections for part I of
subchapter P of chapter 1 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new item:
``Sec. 1203. Exclusion of gain on sale of family farm to family
member.''.
(c) Effective Date.--The amendments made by this section shall
apply to sales occurring on or after the date of enactment of this Act.
<all>