[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4221 Introduced in House (IH)]


109th CONGRESS
  1st Session
                                H. R. 4221

To amend the Internal Revenue Code of 1986 to provide special rules for 
   the exchange or installment sale of certain agricultural property.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            November 3, 2005

 Mr. Aderholt 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 provide special rules for 
   the exchange or installment sale of certain agricultural property.

    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 ``Farmers Tax Deferral Act''.

SEC. 2. SPECIAL RULES FOR EXCHANGE OF QUALIFIED AGRICULTURAL PROPERTY 
              FOR REAL PROPERTY.

    (a) Treated as Like Kind With Real Property.--Section 1031 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new subsection:
    ``(i) Qualified Agricultural Property Treated as Like Kind With 
Real Property.--For purposes of this section--
            ``(1) In general.--In the case of the exchange of qualified 
        agricultural property for real property held either for 
        productive use in a trade or business or for investment, such 
        qualified agricultural property and such real property shall be 
        treated as property of a like kind.
            ``(2) Qualified agricultural property.--The term `qualified 
        agricultural property' means--
                    ``(A) any single purpose agricultural or 
                horticultural structure (as defined in section 
                168(i)(13)), and
                    ``(B) any equipment or fixtures which are related 
                in use to such structure.''.
    (b) Ordinary Income Recapture Deferred Until Disposition of Real 
Property Acquired in Exchange.--
            (1) In general.--Subsection (b) of section 1245 of such 
        Code is amended by adding at the end the following new 
        paragraph:
            ``(9) Special rule for like kind exchanges of qualified 
        agricultural property.--
                    ``(A) In general.--If qualified agricultural 
                property (as defined in section 1031(i)) is disposed of 
                and gain (determined without regard to this section) is 
                not recognized in whole or in part under section 1031, 
                then the amount of gain taken into account by the 
                transferor under subsection (a)(1) shall not exceed the 
                sum of--
                            ``(i) the amount of gain recognized on such 
                        disposition (determined without regard to this 
                        section), plus
                            ``(ii) the fair market value of property 
                        acquired which is not taken into account under 
                        clause (i) and which is not--
                                    ``(I) section 1245 property, or
                                    ``(II) real property held either 
                                for productive use in a trade or 
                                business or for investment.
                    ``(B) Ordinary income recapture on disposition of 
                real property acquired in exchange.--If real property 
                the fair market value of which is taken into account 
                under subparagraph (A)(ii)(II) in determining the gain 
                on the disposition of any qualified agricultural 
                property is disposed of by the transferee, the lesser 
                of--
                            ``(i) the excess of--
                                    ``(I) the amount realized on the 
                                disposition of such real property (in 
                                the case of a disposition other than a 
                                sale, exchange, or involuntary 
                                conversion, the fair market value of 
                                such real property), over
                                    ``(II) the adjusted basis of such 
                                real property, or
                            ``(ii) the amount of gain that would have 
                        been treated as ordinary income under this 
                        section if such qualified agricultural property 
                        were sold at fair market value on the date of 
                        the disposition of such structure,
                shall be treated as ordinary income. Such gain shall be 
                recognized notwithstanding any other provision of this 
                subtitle.''.
            (2) Conforming amendment.--Paragraph (4) of section 1245(b) 
        of such Code is amended by striking ``If'' and inserting 
        ``Except as provided in paragraph (9), if''.
    (c) Effective Date.--
            (1) Subsection (a).--The amendments made by subsection (a) 
        shall apply to transfers after the date of the enactment of 
        this Act.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to dispositions after the date of the enactment of 
        this Act.

SEC. 3. SPECIAL RULES FOR INSTALLMENT SALES OF QUALIFIED AGRICULTURAL 
              PROPERTY.

    (a) In General.--Subsection (i) of section 453 of the Internal 
Revenue Code of 1986 is amended by redesignating paragraph (2) as 
paragraph (3) and by inserting after paragraph (1) the following new 
paragraph:
            ``(2) Special rule for qualified agricultural property.--
        Notwithstanding paragraph (1), in the case of any installment 
        sale of qualified agricultural property (as defined in section 
        1031(i)) to which subsection (a) applies--
                    ``(A) income from the installment sale shall be 
                taken into account under the installment method, and
                    ``(B) income recognized for any taxable year from 
                such sale under such method shall be recognized as 
                recapture income in such year in the same proportion to 
                such income recognized for such year from such sale 
                as--
                            ``(i) the aggregate recapture income from 
                        such sale (recognized or to be recognized when 
                        payment is completed), bears to
                            ``(ii) the aggregate income from such sale 
                        (so recognized or to be recognized).''.
    (b) Conforming Amendment.--Paragraph (3) of section 453(i) of such 
Code, as redesignated under this section, is amended by striking 
``paragraph (1)'' and inserting ``this subsection''.
    (c) Effective Date.--The amendments made by this section shall 
apply to sales after the date of the enactment of this Act.
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