S. 930

119th CONGRESS 1st Session

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 retirement plans.

IN THE SENATE OF THE UNITED STATES · March 11 (legislative day, March 10), 2025 · Sponsor: Mr. McConnell · Committee: Committee on Finance

Table of contents

• S. 930
  • Sec. 139J. Gain from the sale or exchange of qualified farmland property to qualified farmers.

Sec. 139J. Gain from the sale or exchange of qualified farmland property to qualified farmers.

• (a) In general
  • If a taxpayer makes an election under this section and files the agreement referred to in subsection (d)(2), gross income shall not include so much of the gain from the sale or exchange of qualified farmland property to a qualified farmer as does not exceed the aggregate amount contributed by the taxpayer to an individual retirement plan during the 60-day period beginning on the date of such sale or exchange.
• (b) Qualified farmland property; qualified farmer
  • For purposes of this section—
  • (1) Qualified farmland property
    • The term qualified farmland property means real property located in the United States which—
      • has been used by the taxpayer as a farm for farming purposes, or
      • leased by the taxpayer to a farmer for farming purposes,
    • during substantially all of the 10-year period ending on the date of the qualified sale or exchange.
  • (2) Qualified farmer
    • The term qualified farmer means any individual who—
      • is actively engaged in farming (within the meaning of subsections (b) and (c) of section 1001 of the Food Security Act of 1986 ( and (c))), and 7 U.S.C. 1308–1(b)
      • is designated in an agreement under subsection (d)(2).
• (c) Tax treatment of further dispositions or non-Farm use
  • (1) In general
    • If, within 10 years after the date of the sale or exchange—
      • the qualified farmer disposes of any interest in qualified farmland property, or
      • the qualified farmer ceases to use the qualified farmland property as a farm for farming purposes,
    • then, in addition to any other tax, there is hereby imposed for the taxable year of such disposition or cease in use, a tax in the amount determined under paragraph (2).
  • (2) Amount of tax
    • The amount of tax determined under this paragraph is an amount equal to the sum of—
      • the product of—
        • (i) the amount excluded from the gross income under subsection (a), and
        • (ii) the sum of—
        • the highest rate of tax on adjusted net capital gain under section 1(h), plus
        • the rate of tax applicable under section 1411, plus
      • interest at the underpayment rate established under section 6621 on the amount determined under subparagraph (A) for each prior taxable year for the period beginning with the taxable year in which the sale or exchange occurred.
  • (3) Liability for tax
    • The qualified farmer shall be personally liable for the additional tax imposed by this subsection.
  • (4) Partial dispositions
    • For purposes of this subsection, where the qualified farmer disposes of a portion of the qualified farmland acquired by such qualified farmer or there is a cessation of use of such a portion as a farm for farming purposes, the amount determined under paragraph (2)(A)(i) shall be the amount which bears the same ratio the amount otherwise determined under such paragraph as—
      • the portion of the qualified farmland so disposed or ceased to be used, bears to
      • the entire amount of the qualified farmland so acquired.
• (d) Election
  • (1) In general
    • An election under subsection (a) shall be made at such time and in such form and manner as the Secretary shall prescribe. Such an election, once made, shall be irrevocable.
  • (2) Agreement
    • The agreement referred to in this paragraph is a written agreement signed by the qualified farmer designated in such agreement consenting to the application of subsection (c) with respect to the qualified farmland property. Such agreement shall include a statement indicating the amount described in subsection (c)(2)(A)(i).
• (e) Definitions and special rules
  • For purposes of this section—
    • For purposes of this section, the terms and have the respective meanings given such terms under section 2032A(e). farm,farming purposes
    • If qualified farmland property is disposed of or ceases to be used as a farm for farming purposes, then—
    • No deduction shall be allowed under section 219 with respect so much of the qualified retirement contributions for the taxable year as does not exceed the amount excluded from income under subsection (a).