(a) General rule
(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-
(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
(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).
(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 acquired||100 percent.|
|Within the sixth year after it was acquired||80 percent.|
|Within the seventh year after it was acquired||60 percent.|
|Within the eighth year after it was acquired||40 percent.|
|Within the ninth year after it was acquired||20 percent.|
|10 years or more years after it was acquired||0 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.
26 U.S.C. § 1252
AMENDMENTS2018-Subsec. (a)(1). Pub. L. 115-141, §401(b)(32)(A), struck out "during a taxable year beginning" after "disposed of" in introductory provisions.Subsec. (a)(1)(A). 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". Subsec. (a)(2). 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. 2014-Subsec. (a)(1). Pub. L. 113-295, §221(a)(85)(A), struck out "after December 31, 1969" after "beginning" in introductory provisions. Subsec. (a)(1)(A). Pub. L. 113-295, §221(a)(85)(B), struck out "after December 31, 1969," after "taxpayer". 1986-Subsec. (a)(1)(A). 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)". 1984-Subsec. (a)(1). 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-Subsec. (a)(1). 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".Subsec. (b). Pub. L. 94-455, §1906(b)(13)(A), struck out "or his delegate" after "Secretary".
EFFECTIVE DATE OF 2014 AMENDMENT Amendment by Pub. L. 113-295 effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113-295 set out as a note under sectionof this title.
EFFECTIVE DATE OF 1986 AMENDMENT Amendment by Pub. L. 99-514 applicable to amounts paid or incurred after Dec. 31, 1985, in taxable years ending after such date, see section 402(c) of Pub. L. 99-514 set out as an Effective Date of Repeal note under former sectionof this title.
EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98-369 applicable to taxable years beginning after Dec. 31, 1983, see section 492(d) of Pub. L. 98-369 set out as a note under sectionof this title.
EFFECTIVE DATE OF 1976 AMENDMENT Amendment by section 1901(b)(3)(K) of Pub. L. 94-455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455 set out as a note under sectionof this title.
EFFECTIVE DATEPub. L. 91-172, title II, §214(c), Dec. 30, 1969, 83 Stat. 573, provided that: "The amendments made by this section [enacting this section] shall apply to taxable years beginning after December 31, 1969."
SAVINGS PROVISIONFor provisions that nothing in amendment by Pub. L. 115-141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Mar. 23, 2018, for purposes of determining liability for tax for periods ending after Mar. 23, 2018, see section 401(e) of Pub. L. 115-141 set out as a note under sectionof this title.
- The term "Secretary" means the Secretary of the Treasury or his delegate.
- taxable year
- The term "taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A. "Taxable year" means, in the case of a return made for a fractional part of a year under the provisions of subtitle A or under regulations prescribed by the Secretary, the period for which such return is made.
- The term "taxpayer" means any person subject to any internal revenue tax.