[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 3996 Introduced in Senate (IS)]








109th CONGRESS
  2d Session
                                S. 3996

   To amend the Internal Revenue Code of 1986 to allow section 1031 
 treatment for exchanges involving certain mutual ditch, reservoir, or 
                       irrigation company stock.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 29, 2006

Mr. Salazar (for himself and Mr. Allard) 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 allow section 1031 
 treatment for exchanges involving certain mutual ditch, reservoir, or 
                       irrigation company stock.

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

SECTION 1. ALLOWANCE OF SECTION 1031 TREATMENT FOR EXCHANGES INVOLVING 
              CERTAIN MUTUAL DITCH, RESERVOIR, OR IRRIGATION COMPANY 
              STOCK.

    (a) In General.--Section 1031 of the Internal Revenue Code of 1986 
(relating to exchange of property held for productive use or 
investment) is amended by adding at the end the following new 
subsection:
    ``(i) Special Rules for Mutual Ditch, Reservoir, or Irrigation 
Company Stock.--For purposes of subsection (a)(2)(B), the term `stocks' 
shall not include shares in a mutual ditch, reservoir, or irrigation 
company if at the time of the exchange--
            ``(1) the mutual ditch, reservoir, or irrigation company is 
        an organization described in section 501(c)(12)(A) (determined 
        without regard to the percentage of its income that is 
        collected from its members for the purpose of meeting losses 
        and expenses), and
            ``(2) the shares in such company have been recognized by 
        the highest court of the State in which such company was 
        organized or by applicable State statute as constituting or 
        representing real property or an interest in real property.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to transfers after the date of the enactment of this Act.
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