Summary

Creates a tax exclusion so sellers do not have to count as taxable income gains from selling certain property interests to qualified organizations when the sale is part of the Department of Defense Readiness and Environmental Protection Integration (REPI) program. It defines what kinds of property interests qualify, allows sellers to keep certain subsurface mineral rights under limits, and adds guardrails to prevent quick buy-resell tax avoidance by pass-through entities while exempting family-owned pass-throughs. The change is implemented by adding a new Internal Revenue Code section that applies to taxable years beginning after enactment and does not authorize new spending or create program duties beyond the tax treatment change. The act also only sets a short title in a separate, non-substantive section.

Key Points

• Excludes from gross income gains from sales of specified real property interests to qualified organizations when sold under the DoD REPI program.
• Qualified interests include fee simple, remainder interests, and perpetual use restrictions created under state law.
• Sellers may retain some subsurface mineral rights if retaining them does not require surface mining or surface access.
• Pass-through entities that acquired the property within 3 years are barred from using the exclusion to prevent quick buy-and-resell tax avoidance.
• Family-owned pass-throughs (individual plus certain relatives) are exempted from the 3-year pass-through limit; Treasury may extend family rules to S-corps and others.
• Adds a new Internal Revenue Code section and is effective for taxable years beginning after enactment.
• Does not appropriate funds or change REPI program authorities — it only changes tax treatment of qualifying sales.
• Requires IRS/Treasury rulemaking to apply family-pass-through rules and administer the new exclusion.

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