II
119THCONGRESS
1
STSESSION S. 930
To amend the Internal Revenue Code of 1986 to exclude from gross income
capital gains from the sale of certain farmland property which are rein-
vested in individual retirement plans.
IN THE SENATE OF THE UNITED STATES
MARCH11 (legislative day, MARCH10), 2025
Mr. M
CCONNELLintroduced 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 exclude
from gross income capital gains from the sale of certain
farmland property which are reinvested in individual re-
tirement plans.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. EXCLUSION OF CERTAIN CAPITAL GAINS FROM 3
THE SALE OF CERTAIN FARMLAND PROP-4
ERTY. 5
(a) I
NGENERAL.—Part III of subchapter B of chap-6
ter 1 of the Internal Revenue Code of 1986 is amended 7
by inserting after section 139I the following new section: 8
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‘‘SEC. 139J. GAIN FROM THE SALE OR EXCHANGE OF QUALI-1
FIED FARMLAND PROPERTY TO QUALIFIED 2
FARMERS. 3
‘‘(a) I
NGENERAL.—If a taxpayer makes an election 4
under this section and files the agreement referred to in 5
subsection (d)(2), gross income shall not include so much 6
of the gain from the sale or exchange of qualified farmland 7
property to a qualified farmer as does not exceed the ag-8
gregate amount contributed by the taxpayer to an indi-9
vidual retirement plan during the 60-day period beginning 10
on the date of such sale or exchange. 11
‘‘(b) Q
UALIFIEDFARMLANDPROPERTY; QUALIFIED 12
F
ARMER.—For purposes of this section— 13
‘‘(1) Q
UALIFIED FARMLAND PROPERTY .—The 14
term ‘qualified farmland property’ means real prop-15
erty located in the United States which— 16
‘‘(A) has been used by the taxpayer as a 17
farm for farming purposes, or 18
‘‘(B) leased by the taxpayer to a farmer 19
for farming purposes, 20
during substantially all of the 10-year period ending 21
on the date of the qualified sale or exchange. 22
‘‘(2) Q
UALIFIED FARMER.—The term ‘qualified 23
farmer’ means any individual who— 24
‘‘(A) is actively engaged in farming (within 25
the meaning of subsections (b) and (c) of sec-26
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tion 1001 of the Food Security Act of 1986 (7 1
U.S.C. 1308–1(b) and (c))), and 2
‘‘(B) is designated in an agreement under 3
subsection (d)(2). 4
‘‘(c) T
AXTREATMENT OF FURTHERDISPOSITIONS 5
ORNON-FARMUSE.— 6
‘‘(1) I
N GENERAL.—If, within 10 years after 7
the date of the sale or exchange— 8
‘‘(A) the qualified farmer disposes of any 9
interest in qualified farmland property, or 10
‘‘(B) the qualified farmer ceases to use the 11
qualified farmland property as a farm for farm-12
ing purposes, 13
then, in addition to any other tax, there is hereby 14
imposed for the taxable year of such disposition or 15
cease in use, a tax in the amount determined under 16
paragraph (2). 17
‘‘(2) A
MOUNT OF TAX.—The amount of tax de-18
termined under this paragraph is an amount equal 19
to the sum of— 20
‘‘(A) the product of— 21
‘‘(i) the amount excluded from the 22
gross income under subsection (a), and 23
‘‘(ii) the sum of— 24
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‘‘(I) the highest rate of tax on 1
adjusted net capital gain under sec-2
tion 1(h), plus 3
‘‘(II) the rate of tax applicable 4
under section 1411, plus 5
‘‘(B) interest at the underpayment rate es-6
tablished under section 6621 on the amount de-7
termined under subparagraph (A) for each 8
prior taxable year for the period beginning with 9
the taxable year in which the sale or exchange 10
occurred. 11
‘‘(3) L
IABILITY FOR TAX.—The qualified farm-12
er shall be personally liable for the additional tax 13
imposed by this subsection. 14
‘‘(4) P
ARTIAL DISPOSITIONS.— For purposes of 15
this subsection, where the qualified farmer disposes 16
of a portion of the qualified farmland acquired by 17
such qualified farmer or there is a cessation of use 18
of such a portion as a farm for farming purposes, 19
the amount determined under paragraph (2)(A)(i) 20
shall be the amount which bears the same ratio the 21
amount otherwise determined under such paragraph 22
as— 23
‘‘(A) the portion of the qualified farmland 24
so disposed or ceased to be used, bears to 25
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‘‘(B) the entire amount of the qualified 1
farmland so acquired. 2
‘‘(d) E
LECTION.— 3
‘‘(1) I
N GENERAL.—An election under sub-4
section (a) shall be made at such time and in such 5
form and manner as the Secretary shall prescribe. 6
Such an election, once made, shall be irrevocable. 7
‘‘(2) A
GREEMENT.—The agreement referred to 8
in this paragraph is a written agreement signed by 9
the qualified farmer designated in such agreement 10
consenting to the application of subsection (c) with 11
respect to the qualified farmland property. Such 12
agreement shall include a statement indicating the 13
amount described in subsection (c)(2)(A)(i). 14
‘‘(e) D
EFINITIONS ANDSPECIALRULES.—For pur-15
poses of this section— 16
‘‘(1) F
ARM; FARMING PURPOSES .—For pur-17
poses of this section, the terms ‘farm’ and ‘farming 18
purposes’ have the respective meanings given such 19
terms under section 2032A(e). 20
‘‘(2) S
TATUTE OF LIMITATIONS .—If qualified 21
farmland property is disposed of or ceases to be used 22
as a farm for farming purposes, then— 23
‘‘(A) the statutory period for the assess-24
ment of any tax under subsection (c) attrib-25
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utable to such disposition or cessation shall not 1
expire before the expiration of 3 years from the 2
date the Secretary is notified (in such manner 3
as the Secretary may by regulations prescribe) 4
of such disposition or cessation, and 5
‘‘(B) such tax may be assessed before the 6
expiration of such 3-year period notwith-7
standing the provisions of any other law or rule 8
of law which would otherwise prevent such as-9
sessment. 10
‘‘(3) I
NVOLUNTARY CONVERSIONS AND LIKE - 11
KIND EXCHANGES.— 12
‘‘(A) I
NVOLUNTARY CONVERSIONS .—Under 13
regulations provided by the Secretary, no tax 14
shall be imposed under subsection (c) if there is 15
an involuntary conversion (within the meaning 16
of section 2032A(h)(3) of an interest in quali-17
fied farmland property. 18
‘‘(B) L
IKE-KIND EXCHANGES.—Rules simi-19
lar to the rules of section 2032A(i) shall apply 20
where qualified farmland property is disposed of 21
in a transaction which qualifies under section 22
1031. 23
‘‘(4) N
O DOUBLE BENEFIT .—No deduction 24
shall be allowed under section 219 with respect so 25
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much of the qualified retirement contributions for 1
the taxable year as does not exceed the amount ex-2
cluded from income under subsection (a).’’. 3
(b) W
AIVER OFCONTRIBUTIONLIMITATION.—Sec-4
tion 408 of the Internal Revenue Code of 1986 is amended 5
by redesignating subsection (r) as subsection (s) and by 6
inserting after subsection (q) the following new subsection: 7
‘‘(r) I
NCREASEDLIMITATION FORCONTRIBUTIONS 8
OFQUALIFIEDFARMLANDGAIN.— 9
‘‘(1) I
N GENERAL.—For purposes of applying 10
subsections (a)(1) and (b)(2)(B), the amount in ef-11
fect under section 219(b)(1)(A) for any taxable year 12
shall be increased by the lesser of— 13
‘‘(A) the aggregate amount of gain by the 14
taxpayer from the sale or exchange of qualified 15
farmland property to a qualified farmer during 16
the period beginning 60 days before the first 17
day of such taxable year and ending with the 18
last day of such taxable year, or 19
‘‘(B) the amount contributed during the 20
60-day period ending with such sale or ex-21
change to individual retirement plans of the 22
taxpayer. 23
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‘‘(2) DEFINITIONS.—Any term used in this sec-1
tion which is used in section 139J shall have the 2
meaning given such term under such section.’’. 3
(c) C
LERICALAMENDMENT.—The table of sections 4
for part III of subchapter B of chapter 1 of the Internal 5
Revenue Code of 1986 is amended by inserting after the 6
item relating to section 139I the following new item: 7
‘‘Sec. 139J. Gain from the sale or exchange of qualified farmland property to
qualified farmers.’’.
(d) EFFECTIVEDATE.—The amendments made by 8
this section shall apply to sales or exchanges in taxable 9
years beginning after the date of the enactment of this 10
Act. 11
Æ
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