Sec. 111106. Exclusion of interest on loans secured by rural or agricultural real property
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Part III of subchapter B of chapter 1, as amended by the preceding provisions of this Act, is amended by inserting after section 139J the following new section: Gross income shall not include 25 percent of the interest received by a qualified lender on any qualified real estate loan. For purposes of this section, the term qualified lender means— any bank or savings association the deposits of which are insured under the Federal Deposit Insurance Act ( 12 U.S.C. 1811 et seq. ), any State- or federally-regulated insurance company, any entity wholly owned, directly or indirectly, by a company that is treated as a bank holding company for purposes of section 8 of the International Banking Act of 1978 ( 12 U.S.C. 3106 ) if— such entity is organized, incorporated, or established under the laws of the United States or any State of the United States, and the principal place of business of such entity is in the United States (including any territory of the United States), any entity wholly owned, directly or indirectly, by a company that is considered an insurance holding company under the laws of any State if such entity satisfies the requirements described in subparagraphs
(A)and
(B)of paragraph (3), and with respect to interest received on a qualified real estate loan secured by real estate described in subsection (c)(3)(A), any federally chartered instrumentality of the United States established under section 8.1(a) of the Farm Credit Act of 1971 ( 12 U.S.C. 2279aa-1(a) ). For purposes of this section— The term qualified real estate loan means any loan— secured by— rural or agricultural real estate, or a leasehold mortgage (with a status as a lien) on rural or agricultural real estate, made to a person other than a specified foreign entity (as defined in section 7701(a)(51)), and made after the date of the enactment of this section and before January 1, 2029. For purposes of the preceding sentence, the determination of whether property securing such loan is rural or agricultural real estate shall be made as of the time the interest income on such loan is accrued. For purposes of subparagraphs
(A)and
(C)of paragraph (1), a loan shall not be treated as made after the date of the enactment of this section to the extent that the proceeds of such loan are used to refinance a loan which was made on or before the date of the enactment of this section (or, in the case of any series of refinancings, the original loan was made on or before such date). The term rural or agricultural real estate means— any real property which is substantially used for the production of one or more agricultural products, any real property which is substantially used in the trade or business of fishing or seafood processing, and any aquaculture facility. Such term shall not include any property which is not located in a State or a possession of the United States. The term aquaculture facility means any land, structure, or other appurtenance that is used for aquaculture (including any hatchery, rearing pond, raceway, pen, or incubator). Qualified real estate loans shall be treated as obligations described in section 265(a)(2) the interest on which is wholly exempt from the taxes imposed by this subtitle. . The table of sections for part III of subchapter B of chapter 1, as amended by the preceding provisions of this Act, is amended by inserting after the item relating to section 139J the following new item: Sec. 139K. Interest on loans secured by rural or agricultural real property. . The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act.
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Sec. 111106
Exclusion of interest on loans secured by rural or agricultural real property
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