Sponsors (12)
Official title: To amend the Internal Revenue Code of 1986 to provide an exclusion from gross income of gain from the sale of qualified farm property to qualified family members.
Introduced April 30, 2026 by Thomas Massie · Last progress April 30, 2026
The bill helps keep family farms in families by letting sellers exclude gains and giving transferees favorable basis treatment, but it reduces federal revenue and creates opportunities for tax deferral or avoidance that complicate enforcement.
Owners of qualifying family farms can exclude gains from taxable income when selling to qualifying family members, lowering immediate federal income tax bills for those sellers.
Family-member transferees who keep the farm for at least 10 years receive a step-up in basis to fair market value above the transferred basis, reducing future capital gains taxes if they later sell.
Eases intergenerational transfers of farms, helping more family farms remain in operation and supporting continuity of rural livelihoods and local agricultural businesses.
All taxpayers could bear higher deficits or reduced federal services because excluding these sale gains lowers federal income tax revenue.
Transferees getting carryover basis for up to 10 years defers taxable gains and can shift or reduce future tax receipts if property remains in the family, delaying or reducing revenue collection.
Creates opportunities to shelter gains by selling to family rather than arm's-length buyers, increasing potential tax avoidance and adding administrative complexity for IRS enforcement.
Based on analysis of 2 sections of legislative text.
Excludes gain on sales of qualifying U.S. farm real property to specified family members and provides a 10-year hold rule for a later basis step-up.
Excludes gains from the sale or exchange of certain U.S. farm real property when that property is transferred to specified family members. The transferee generally takes the seller's basis, but if the family member retains the property for 10 years, the basis is stepped up to fair market value to the extent it exceeds the transferred basis. The exclusion applies only to ‘‘qualified farm property’’ owned and used as a farm for at least two of the prior eight years and applies to sales or exchanges after enactment.