To amend the Internal Revenue Code of 1986 to allow farmland sold during the same taxable year as the farmer's principal residence to be eligible for the $125,000 exclusion of gain on sale of a principal residence.

Amends the Internal Revenue Code to allow a taxpayer to include farm property sold during the same taxable year as a principal residence in the one-time exclusion of gain from sale of a principal residence by an individual who has attained age 55. Sets forth a formula limiting the extent of such exclusion.

 
HR 5429 IH
101st CONGRESS
2d Session
 H. R. 5429
To amend the Internal Revenue Code of 1986 to allow farmland sold during
the same taxable year as the farmer's principal residence to be eligible
for the $125,000 exclusion of gain on sale of a principal residence.
IN THE HOUSE OF REPRESENTATIVES
August 1, 1990
Mr. SLATTERY (for himself and Mr. DORGAN of North Dakota) introduced the
following bill; which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to allow farmland sold during
the same taxable year as the farmer's principal residence to be eligible
for the $125,000 exclusion of gain on sale of a principal residence.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
SECTION 1. UNUSED EXCLUSION FOR GAIN ON FARMSTEAD ALLOWED AS EXCLUSION FOR
GAIN ON FARMLAND.
  (a) IN GENERAL- Section 121 of the Internal Revenue Code of 1986 (relating to
  one-time exclusion of gain from sale of principal residence by individual
  who has attained age 55) is amended by adding at the end thereof the
  following new subsection:
  `(e) Unused Exclusion Allowed for Gain on Farmland-
  `(1) IN GENERAL- If during the taxable year--
  `(A) the taxpayer sold or exchanged property with respect to which the
  taxpayer makes a valid election under subsection (a), and
  `(B) the taxpayer also sold or exchanged qualified farm property,
then gross income does not include gain from the sale or exchange of such
qualified farm property to the extent provided in paragraph (2).
  `(2) LIMITATION ON AMOUNT OF EXCLUSION- The amount of the gain excluded from
  gross income under this subsection shall not exceed the excess (if any) of--
  `(A) the dollar limitation applicable to the taxpayer under subsection
  (b)(1), over
  `(B) the amount of gain excluded from gross income under subsection (a).
  `(3) QUALIFIED FARM PROPERTY- For purposes of this subsection, the term
  `qualified farm property' means real property located in the United States
  if, during periods aggregating 3 years or more of the 5-year period ending
  on the date of the sale or exchange of such real property--
  `(A) such real property was used as a farm for farming purposes by the
  taxpayer or a member of the family of the taxpayer, and
  `(B) there was material participation by the taxpayer (or such a member)
  in the operation of the farm.
  `(4) DEFINITIONS- For purposes of this subsection, the terms `member of
  the family', `farm', and `farming purposes' have the respective meanings
  given such terms by paragraphs (2), (4), and (5) of section 2032A(e).
  `(5) SPECIAL RULES- For purposes of this section, rules similar to the
  rules of paragraghs (3) and (6) of section 2032A(e) shall apply.'
  (b) EFFECTIVE DATE- The amendment made by this section shall apply to
  taxable years beginning after December 31, 1989.