Sec. 521. Removing barriers to farming through an eligible farmer tax credit
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Subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: In the case of a taxpayer who sells qualified farming property to an eligible farmer during the taxable year, there shall be allowed as a credit against the tax imposed by this chapter for such taxable year an amount equal to 10 percent of the sales price of such property. In the case of a taxpayer who is an eligible farmer and purchases qualified farming property during the taxable year, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal 10 percent of the purchase price of such property.
For purposes of this section— The term eligible farmer means— any socially disadvantaged farmer or rancher, as defined in section 2501(e)(2) of the Food, Agriculture, Conservation, and Trade Act of 1990 ( 7 U.S.C. 2279(e)(2) ), any veteran farmer or rancher (as defined in section 2501(e)(7) of such Act ( 7 U.S.C. 2279(e)(7) )), or any beginning farmer or rancher. The term beginning farmer or rancher means an individual or entity who— has not operated a farm or ranch, or who has operated a farm or ranch for not more than 10 consecutive years, and will materially and substantially participate in the operation of the farm or ranch.
For purposes of clause (i), the term material and substantial participation means— in the case of an individual, that the individual provides substantial day-to-day labor and management of the farm or ranch, consistent with the practices in the county or State where the farm is located, and in the case of an entity, that all shareholders, holders of a capital or profits interest in the case of a partnership, or holders of a beneficial interest in the case of a trust or cooperative provide some amount of the management or labor necessary for day-to-day activities such that if each of the members did not provide these inputs, operation of the farm or ranch would be seriously impaired.
Any predecessor of any entity shall be treated as such entity for purposes of clause (i)(I). All persons which are treated as a single employer under subsections
(a)and
(b)of section 52 shall be treated as a single employer for purposes of this subparagraph. The term qualified farming property means any property— which is used in the trade or business of farming or ranching in the United States, and which is— property of a character subject to an allowance for depreciation, or land used for the production of crops, fruits, or other agricultural products or for the sustenance of livestock. In the case of any tree, vine, or livestock which is not subject to an allowance for depreciation solely by reason of not having reached the income-producing stage or age of maturity, as the case may be, such tree, vine, or livestock shall be treated as property of a character subject to an allowance for depreciation for purposes of this section. Such term shall not include any land which is not subject to a State agricultural land preservation program, permanent agricultural conservation easement, is not valued as agricultural land using special use valuation requirements, or is not under another long-term or permanent protection. No credit shall be allowed to a taxpayer under this section unless, at such time and in such form and manner as the Secretary shall prescribe— there is submitted to the Secretary a description of the qualified farming property with respect to which the credit under this section is determined, the eligible farmer submits to the Secretary an attestation of intent to treat such property as qualified farming property during the 8-year period beginning on the date of the sale or purchase to which this section applies, and the taxpayer who sells such property in the case of any credit determined under subsection (a), and the eligible farmer who purchases such property in the case of any credit determined under subsection (b), submits to the Secretary an agreement consenting to the application of paragraph (2). If any property with respect to which a credit is allowed under this section ceases to be qualified farming property during the 8-year period beginning on the date of the sale or purchase to which this section applies, the tax imposed by this chapter for the taxable year during which such property so ceases shall be increased by the applicable percentage of the amount of credit allowed under this section with respect to such property. For purposes of this paragraph, in the case of property which ceases to be qualified farming property during the 8-year period, the applicable percentage shall be determined under the following table: For property which so ceases during: The applicable percentage is: The first or second year 100 percent The third or fourth year 75 percent The fifth or sixth year 50 percent The seventh or eighth year 25 percent. For purposes of this paragraph, property which, during such 8-year period, is no longer capable of being used in the trade or business of farming shall be treated as ceasing to be qualified farming property. A sale or purchase shall only be taken into account under this section if the property is not acquired from a person related to the person acquiring such property (or, if married, such individual’s spouse). A person shall be treated as related to another person if the relationship between such persons would result in the disallowance of losses under section 267 or 707(b). So much of the credit which would be allowed under this section for any taxable year (determined without regard to this paragraph) that is attributable to property that is land used in a trade or business of the taxpayer, or that in the hands of the taxpayer is of a character subject to an allowance for depreciation, shall be treated as a credit listed in section 38(b) for such taxable year (and not allowed under this section). The credit allowed under subsection
(a)(after the application of paragraph (1)) for any taxable year shall be treated as a credit allowable under subpart A for such taxable year. For purposes of this subtitle, the basis of any property for which a credit is allowable under this section shall be reduced by the amount of such credit so allowed. . Section 38(b) of such Code is amended by striking plus at the end of paragraph (35), by striking the period at the end of paragraph
(36)and inserting , plus , and by adding at the end the following new paragraph: the portion of the eligible farmer credit to which section 30E(d)(3)(A) applies. . The table of sections for subpart B of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item: Sec. 30E. Eligible farmer credits. . The amendments made by this section shall apply to taxable years beginning after December 31, 2018.
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Sec. 521
Removing barriers to farming through an eligible farmer tax credit
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