(a) General rule
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(1) Ordinary income Except as otherwise provided in this section, if farm land which the taxpayer has held for less than 10 years is disposed of, the lower of—
Amended 1976, 1984, 2014, 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(32)(A), struck out “during a taxable year beginning” after “disposed of” in introductory provisions.
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(85)(A), struck out “after December 31, 1969” after “beginning” in introductory provisions.
- 1984 Pub. L. 98-369 Pub. L. 98–369 struck out “, except that this section shall not apply to the extent section 1251 applies to such gain” after “of this subtitle” in last sentence.
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(b)(3)(K), substituted “ordinary income” for “gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231”.
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(A) the applicable percentage of the aggregate of the deductions allowed under section 175 (relating to soil and water conservation expenditures) for expenditures made by the taxpayer with respect to the farm land or
Amended 1986, 2014, 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(32)(B), substituted “section” for “sections” and “for expenditures” for “and 182 (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) for expenditures”.
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(85)(B), struck out “after December 31, 1969,” after “taxpayer”.
- 1986 Pub. L. 99-514 Pub. L. 99–514 substituted “(as in effect on the day before the date of the enactment of the Tax Reform Act of 1986)” for “(relating to expenditures by farmers for clearing land)”.
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(B) the excess of—
(i) the amount realized (in the case of a sale, exchange, or involuntary conversion), or the fair market value of the farm land (in the case of any other disposition), over
(ii) the adjusted basis of such land,
shall be treated as ordinary income. Such gain shall be recognized notwithstanding any other provision of this subtitle.
(2) Farm land For purposes of this section, the term “farm land” means any land with respect to which deductions have been allowed under section 175 (relating to soil and water conservation expenditures).
Amended 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(32)(C), substituted “section” for “sections” and struck out “or 182 (relating to expenditures by farmers for clearing land)” before period at end.
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(3) Applicable percentage For purposes of this section— If the farm land is disposed of—The applicablepercentage is— Within 5 years after the date it was acquired100 percent. Within the sixth year after it was acquired80 percent. Within the seventh year after it was acquired60 percent. Within the eighth year after it was acquired40 percent. Within the ninth year after it was acquired20 percent. 10 years or more years after it was acquired0 percent.
(b) Special rules Under regulations prescribed by the Secretary, rules similar to the rules of section 1245 shall be applied for purposes of this section.
Amended 1976
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.