Sponsors (5)
The bill lets farmland sellers defer and preserve sale proceeds by rolling gains into IRAs to support farm continuity and retirement savings, at the cost of potential 10‑year recapture liability, reduced transactional flexibility, and increased audit/administrative exposure.
Farm sellers who roll qualifying farmland sale proceeds into an IRA within 60 days can exclude the capital gain from gross income, reducing immediate tax liability.
Active farmer buyers can receive farmland without creating extra tax burden for sellers, facilitating farm transfers and continuity in rural communities.
Sellers can make larger-than-normal IRA contributions tied to qualified farmland gain so they can preserve retirement savings from the transaction.
Farmers who stop farming or dispose of the land within 10 years face recapture tax, creating potential large long-term liability and administrative burden.
The election is irrevocable and must be made via a signed written agreement, reducing flexibility for buyers and sellers and adding transaction complexity and legal requirements.
The IRS assessment period is extended so the agency can assess recapture tax up to 3 years after notification of disposition, increasing audit exposure for sellers.
Based on analysis of 2 sections of legislative text.
Creates a new tax rule that lets a seller exclude part of the capital gain from the sale of qualifying farmland to a qualified farmer if the seller elects the treatment and promptly puts the excluded amount into an individual retirement account (IRA) within 60 days. The exclusion is limited to the amount actually contributed to the IRA in that 60-day window and the election is irrevocable. If the buyer (the qualified farmer) later stops using the property for farming or disposes of it within 10 years, a recapture tax becomes due and the qualified farmer is personally liable for that tax. Also updates IRA contribution limits to allow these deposited amounts above normal limits (subject to statutory caps and annual limits), denies a retirement deduction for contributions up to the excluded amount, provides special rules for involuntary conversions and qualifying exchanges, and extends the IRS assessment window tied to recapture events.
Introduced March 11, 2025 by Addison Mitchell McConnell · Last progress March 11, 2025