[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 2762 Introduced in Senate (IS)]







107th CONGRESS
  2d Session
                                S. 2762

   To amend the Internal Revenue Code of 1986 to provide involuntary 
  conversion tax relief for producers forced to sell livestock due to 
weather-related conditions or Federal land management agency policy or 
                    action, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 19, 2002

   Mr. Thomas (for himself, Mr. Enzi, 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 involuntary 
  conversion tax relief for producers forced to sell livestock due to 
weather-related conditions or Federal land management agency policy or 
                    action, 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. INVOLUNTARY CONVERSION RELIEF FOR PRODUCERS FORCED TO SELL 
              LIVESTOCK DUE TO WEATHER-RELATED CONDITIONS OR FEDERAL 
              LAND MANAGEMENT AGENCY POLICY OR ACTION.

    (a) Income Inclusion Rules.--Subsection (e) of section 451 of the 
Internal Revenue Code of 1986 (relating to general rule for taxable 
year of inclusion) is amended to read as follows:
    ``(e) Special Rule for Proceeds From Livestock Sold on Account of 
Weather-Related Conditions or Federal Land Management Agency Policy or 
Action.--
            ``(1) In general.--In the case of income derived from the 
        sale or exchange of livestock in excess of the number the 
        taxpayer would sell if he followed his usual business 
        practices, a taxpayer may elect to include such income for the 
        taxable year following two full taxable years in which the 
        weather-related conditions or forced sales caused by Federal 
        land management agency policy or action which resulted in such 
        sale or exchange do not exist if such taxpayer establishes 
        that, under his usual business practices, the sale or exchange 
        would not have occurred in the taxable year in which it 
        occurred if it were not for--
                    ``(A) the weather-related conditions that resulted 
                in the area being designated as eligible for assistance 
                by the Federal Government, or
                    ``(B) forced sales resulting from Federal land 
                management agency policy or action.
            ``(2) Limitation.--Paragraph (1) shall apply only to a 
        taxpayer whose principal trade or business is farming (within 
        the meaning of section 6420(c)(3)).
            ``(3) Special rules for drought designations.--For purposes 
        of this subsection, areas may be designated as eligible for 
        drought condition assistance--
                    ``(A) by Federal Government declaration, or
                    ``(B) through Farm Service Agency flash reports as 
                verified and approved by the Farm Service Agency 
                director of the State in which such condition 
                exists.''.
    (b) Rules for Replacement of Involuntarily Converted Livestock.--
            (1) In general.--Section 1033(a)(2)(B) of the Internal 
        Revenue Code of 1986 (relating to period within which property 
        must be replaced) is amended by redesignating clause (ii) as 
        clause (iii) and by inserting after clause (i) the following 
        new clause:
                            ``(ii) in the case of an involuntary 
                        conversion described in subsection (e), 2 years 
                        after the close of the taxable year following 
                        the year in which any part of the gain upon the 
                        conversion is realized and in which weather-
                        related conditions or forced sales resulting 
                        from Federal land management agency policy or 
                        action have ended, or''.
            (2) Involuntary conversion described.--Subsection (e) of 
        section 1033 of such Code (relating to involuntary conversions) 
        is amended to read as follows:
    ``(e) Livestock Sold on Account of Weather-Related Conditions or 
Federal Land Management Agency Policy or Action.--For purposes of this 
subtitle, the sale or exchange of livestock (other than poultry) in 
excess of the number the taxpayer would sell if he followed usual 
business practices, shall be treated as an involuntary conversion to 
which this section applies if such livestock are sold or exchanged by 
the taxpayer solely on account of weather-related conditions or forced 
sales caused by Federal land management agency policy or action.''.
            (3) Conversion by heirs.--Section 1033(a)(2) of such Code 
        is amended by adding at the end the following new subparagraph:
                    ``(F) Conversion of certain property by heirs.--In 
                the case of an involuntary conversion of property 
                described in subsection (e), if the taxpayer dies 
                during the period specified in subparagraph (B), the 
                requirements of subparagraph (A) shall be satisfied if 
                the decedent's--
                            ``(i) personal representative,
                            ``(ii) the beneficiary of the converted 
                        property, if no personal representative exists, 
                        or
                            ``(iii) the trustee in the case of a trust,
                replaces the property within such period.''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to sales or exchanges after the date of the 
enactment of this Act.
                                 <all>