[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 3650 Introduced in Senate (IS)]

112th CONGRESS
  2d Session
                                S. 3650

To amend the Internal Revenue Code of 1986 to facilitate water leasing 
      and water transfers to promote conservation and efficiency.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 29, 2012

  Mr. Udall of Colorado (for himself, Mr. Crapo, Mr. Bennet, and Mr. 
   Barrasso) 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 facilitate water leasing 
      and water transfers to promote conservation and efficiency.

    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 ``Ditch and Irrigation Company Tax 
Reform Act''.

SEC. 2. FACILITATE WATER LEASING AND WATER TRANSFERS TO PROMOTE 
              CONSERVATION AND EFFICIENCY.

    (a) In General.--Paragraph (12) of section 501(c) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(I) Treatment of mutual ditch or irrigation 
                companies.--
                            ``(i) In general.--In the case of a mutual 
                        ditch or irrigation company or like 
                        organization, subparagraph (A) shall be applied 
                        without taking into account any income received 
                        or accrued--
                                    ``(I) from the sale, lease, or 
                                exchange of fee or other interests in 
                                real property, including interests in 
                                water,
                                    ``(II) from the sale or exchange of 
                                stock in a mutual ditch or irrigation 
                                company or like organization or 
                                contract rights for the delivery or use 
                                of water, or
                                    ``(III) from the investment of 
                                proceeds from sales, leases, or 
                                exchanges under subclauses (I) and 
                                (II),
                        except that any income received under subclause 
                        (I), (II), or (III) which is distributed or 
                        expended for expenses other than operations and 
                        maintenance of the mutual ditch or irrigation 
                        company or like organization shall be treated 
                        as non-member income in the year in which it is 
                        distributed or expended. For purposes of the 
                        preceding sentence, expenses other than 
                        operations and maintenance include expenses for 
                        the construction of conveyances designed to 
                        deliver water outside of the mutual ditch or 
                        irrigation company or like organization system.
                            ``(ii) Treatment of organizational 
                        governance.--In the case of a mutual ditch or 
                        irrigation company or like organization, where 
                        State law provides that such a company or 
                        organization may be organized in a manner that 
                        permits voting on a basis which is pro-rata to 
                        share ownership on corporate governance 
                        matters, subparagraph (A) shall be applied 
                        without taking into account whether its member 
                        shareholders have one vote on corporate 
                        governance matters per share held in the 
                        corporation. Nothing in this clause shall be 
                        construed to create any inference about the 
                        requirements of this subsection for companies 
                        or organizations not included in this 
                        clause.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
                                 <all>