II 110th CONGRESS 1st Session S. 499 IN THE SENATE OF THE UNITED STATES February 6, 2007 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.

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.