Sets forth various tax incentives for farmers and small businesses, including: (1) an increased deduction for health insurance of the self-employed; (2) an increased estate and gift tax credit; and (3) the exemption of certain unincorporated farm income from the alternative minimum tax.
Amends the Consolidated Farm and Rural Development Act, the Federal Agricultural Improvement and Reform Act of 1996, and the Rural Development Act of 1972 to, respectively: (1) give priority to projects that encourage the creation of farmer-owned facilities that process value-added agricultural products; (2) permit the use of funds from the Fund for Rural America to provide technical assistance for any authorized rural development activity; and (3) permit extension programs to provide specified education and technical assistance to small- and medium-sized farmers.
[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1861 Introduced in Senate (IS)]
106th CONGRESS
1st Session
S. 1861
To amend the Internal Revenue Code of 1986 to provide comprehensive tax
relief for small family farmers, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
November 4, 1999
Mr. Grams introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide comprehensive tax
relief for small family farmers, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Farmer Tax Relief
Act of 1999''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(c) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; etc.
Sec. 2. Farm and ranch risk management accounts.
Sec. 3. Increase in deduction for health insurance costs of self-
employed individuals.
Sec. 4. Increase in unified estate and gift tax credits.
Sec. 5. Inclusion of farmland as part of principal residence.
Sec. 6. Averaging of farm income.
Sec. 7. Exemption for farm income from unincorporated farm businesses
from alternative minimum tax.
Sec. 8. Capital gain realized from transfer of farm property in
complete or partial satisfaction of
qualified farm indebtedness excluded from
gross income.
Sec. 9. Exclusion of farm rental income in connection with certain
lease agreements from net earnings from
self-employment.
Sec. 10. Agricultural program improvements.
Sec. 11. Cooperative marketing includes value-added processing through
animals.
Sec. 12. Declaratory judgment relief for section 521 cooperatives.
Sec. 13. Increase in threshold amount for cash remuneration for
purposes of payroll tax.
SEC. 2. FARM AND RANCH RISK MANAGEMENT ACCOUNTS.
(a) In General.--Subpart C of part II of subchapter E of chapter 1
(relating to taxable year for which deductions taken) is amended by
inserting after section 468B the following:
``SEC. 468C. FARM AND RANCH RISK MANAGEMENT ACCOUNTS.
``(a) Deduction Allowed.--In the case of an individual engaged in
an eligible farming business, there shall be allowed as a deduction for
any taxable year the amount paid in cash by the taxpayer during the
taxable year to a Farm and Ranch Risk Management Account (hereinafter
referred to as the `FARRM Account').
``(b) Limitation.--The amount which a taxpayer may pay into the
FARRM Account for any taxable year shall not exceed 20 percent of so
much of the taxable income of the taxpayer (determined without regard
to this section) which is attributable (determined in the manner
applicable under section 1301) to any eligible farming business.
``(c) Eligible Farming Business.--For purposes of this section, the
term `eligible farming business' means any farming business (as defined
in section 263A(e)(4)) which is not a passive activity (within the
meaning of section 469(c)) of the taxpayer.
``(d) FARRM Account.--For purposes of this section--
``(1) In general.--The term `FARRM Account' means a trust
created or organized in the United States for the exclusive
benefit of the taxpayer, but only if the written governing
instrument creating the trust meets the following requirements:
``(A) No contribution will be accepted for any
taxable year in excess of the amount allowed as a
deduction under subsection (a) for such year.
``(B) The trustee is a bank (as defined in section
408(n)) or another person who demonstrates to the
satisfaction of the Secretary that the manner in which
such person will administer the trust will be
consistent with the requirements of this section.
``(C) The assets of the trust consist entirely of
cash or of obligations which have adequate stated
interest (as defined in section 1274(c)(2)) and which
pay such interest not less often than annually.
``(D) All income of the trust is distributed
currently to the grantor.
``(E) The assets of the trust will not be
commingled with other property except in a common trust
fund or common investment fund.
``(2) Account taxed as grantor trust.--The grantor of a
FARRM Account shall be treated for purposes of this title as
the owner of such Account and shall be subject to tax thereon
in accordance with subpart E of part I of subchapter J of this
chapter (relating to grantors and others treated as substantial
owners).
``(e) Inclusion of Amounts Distributed.--
``(1) In general.--Except as provided in paragraph (2),
there shall be includible in the gross income of the taxpayer
for any taxable year--
``(A) any amount distributed from a FARRM Account
of the taxpayer during such taxable year, and
``(B) any deemed distribution under--
``(i) subsection (f)(1) (relating to
deposits not distributed within 5 years),
``(ii) subsection (f)(2) (relating to
cessation in eligible farming business), and
``(iii) subparagraph (A) or (B) of
subsection (f)(3) (relating to prohibited
transactions and pledging account as security).
``(2) Exceptions.--Paragraph (1)(A) shall not apply to--
``(A) any distribution to the extent attributable
to income of the Account, and
``(B) the distribution of any contribution paid
during a taxable year to a FARRM Account to the extent
that such contribution exceeds the limitation
applicable under subsection (b) if requirements similar
to the requirements of section 408(d)(4) are met.
For purposes of subparagraph (A), distributions shall be
treated as first attributable to income and then to other
amounts.
``(3) Exclusion from self-employment tax.--Amounts included
in gross income under this subsection shall not be included in
determining net earnings from self-employment under section
1402.
``(f) Special Rules.--
``(1) Tax on deposits in account which are not distributed
within 5 years.--
``(A) In general.--If, at the close of any taxable
year, there is a nonqualified balance in any FARRM
Account--
``(i) there shall be deemed distributed
from such Account during such taxable year an
amount equal to such balance, and
``(ii) the taxpayer's tax imposed by this
chapter for such taxable year shall be
increased by 10 percent of such deemed
distribution.
The preceding sentence shall not apply if an amount
equal to such nonqualified balance is distributed from
such Account to the taxpayer before the due date
(including extensions) for filing the return of tax
imposed by this chapter for such year (or, if earlier,
the date the taxpayer files such return for such year).
``(B) Nonqualified balance.--For purposes of
subparagraph (A), the term `nonqualified balance' means
any balance in the Account on the last day of the
taxable year which is attributable to amounts deposited
in such Account before the 4th preceding taxable year.
``(C) Ordering rule.--For purposes of this
paragraph, distributions from a FARRM Account shall be
treated as made from deposits in the order in which
such deposits were made, beginning with the earliest
deposits. For purposes of the preceding sentence,
income of such an Account shall be treated as a deposit
made on the date such income is received by the
Account.
``(2) Cessation in eligible farming business.--At the close
of the first disqualification period after a period for which
the taxpayer was engaged in an eligible farming business, there
shall be deemed distributed from the FARRM Account of the
taxpayer an amount equal to the balance in such Account (if
any) at the close of such disqualification period. For purposes
of the preceding sentence, the term `disqualification period'
means any period of 2 consecutive taxable years for which the
taxpayer is not engaged in an eligible farming business.
``(3) Certain rules to apply.--Rules similar to the
following rules shall apply for purposes of this section:
``(A) Section 408(e)(2) (relating to loss of
exemption of account where individual engages in
prohibited transaction).
``(B) Section 408(e)(4) (relating to effect of
pledging account as security).
``(C) Section 408(g) (relating to community
property laws).
``(D) Section 408(h) (relating to custodial
accounts).
``(4) Time when payments deemed made.--For purposes of this
section, a taxpayer shall be deemed to have made a payment to a
FARRM Account on the last day of a taxable year if such payment
is made on account of such taxable year and is made within 3\1/
2\ months after the close of such taxable year.
``(5) Individual.--For purposes of this section, the term
`individual' shall not include an estate or trust.
``(g) Reports.--The trustee of a FARRM Account shall make such
reports regarding such Account to the Secretary and to the person for
whose benefit the Account is maintained with respect to contributions,
distributions, and such other matters as the Secretary may require
under regulations. The reports required by this subsection shall be
filed at such time and in such manner and furnished to such persons at
such time and in such manner as may be required by such regulations.''
(b) Deduction Allowed in Computing Adjusted Gross Income.--
Subsection (a) of section 62 (defining adjusted gross income) is
amended by inserting after paragraph (17) the following:
``(18) Contributions to farm and ranch risk management
accounts.--The deduction allowed by section 468C(a).''
(c) Tax on Excess Contributions.--
(1) Subsection (a) of section 4973 (relating to tax on
excess contributions to certain tax-favored accounts and
annuities) is amended by striking ``or'' at the end of
paragraph (3), by redesignating paragraph (4) as paragraph (5),
and by inserting after paragraph (3) the following:
``(4) a FARRM Account (within the meaning of section
468C(d)), or''.
(2) Section 4973 is amended by adding at the end the
following:
``(g) Excess Contributions to FARRM Accounts.--For purposes of this
section, in the case of a FARRM Account (within the meaning of section
468C(d)), the term `excess contributions' means the amount by which the
amount contributed for the taxable year to the Account exceeds the
amount which may be contributed to the Account under section 468C(b)
for such taxable year. For purposes of this subsection, any
contribution which is distributed out of the FARRM Account in a
distribution to which section 468C(e)(2)(B) applies shall be treated as
an amount not contributed.''
(3) The section heading for section 4973 is amended to read
as follows:
``SEC. 4973. EXCESS CONTRIBUTIONS TO CERTAIN ACCOUNTS, ANNUITIES,
ETC.''
(4) The table of sections for chapter 43 is amended by
striking the item relating to section 4973 and inserting the
following:
``Sec. 4973. Excess contributions to
certain accounts, annuities,
etc.''
(d) Tax on Prohibited Transactions.--
(1) Subsection (c) of section 4975 (relating to tax on
prohibited transactions) is amended by adding at the end the
following:
``(6) Special rule for farrm accounts.--A person for whose
benefit a FARRM Account (within the meaning of section 468C(d))
is established shall be exempt from the tax imposed by this
section with respect to any transaction concerning such account
(which would otherwise be taxable under this section) if, with
respect to such transaction, the account ceases to be a FARRM
Account by reason of the application of section 468C(f)(3)(A)
to such account.''
(2) Paragraph (1) of section 4975(e) is amended by
redesignating subparagraphs (E) and (F) as subparagraphs (F)
and (G), respectively, and by inserting after subparagraph (D)
the following:
``(E) a FARRM Account described in section
468C(d),''.
(e) Failure To Provide Reports on FARRM Accounts.--Paragraph (2) of
section 6693(a) (relating to failure to provide reports on certain tax-
favored accounts or annuities) is amended by redesignating
subparagraphs (C) and (D) as subparagraphs (D) and (E), respectively,
and by inserting after subparagraph (B) the following:
``(C) section 468C(g) (relating to FARRM
Accounts),''.
(f) Clerical Amendment.--The table of sections for subpart C of
part II of subchapter E of chapter 1 is amended by inserting after the
item relating to section 468B the following:
``Sec. 468C. Farm and Ranch Risk
Management Accounts.''
(g) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 3. INCREASE IN DEDUCTION FOR HEALTH INSURANCE COSTS OF SELF-
EMPLOYED INDIVIDUALS.
(a) In General.--Section 162(l)(1) (relating to special rules for
health insurance costs of self-employed individuals) is amended to read
as follows:
``(1) Allowance of deduction.--In the case of an individual
who is an employee within the meaning of section 401(c)(1),
there shall be allowed as a deduction under this section an
amount equal to the amount paid during the taxable year for
insurance which constitutes medical care for the taxpayer, the
taxpayer's spouse, and dependents.''
(b) Clarification of Limitations on Other Coverage.--The first
sentence of section 162(l)(2)(B) of the Internal Revenue Code of 1986
is amended to read as follows: ``Paragraph (1) shall not apply to any
taxpayer for any calendar month for which the taxpayer participates in
any subsidized health plan maintained by any employer (other than an
employer described in section 401(c)(4)) of the taxpayer or the spouse
of the taxpayer.''
(c) Effective Date.--The amendments made by this section apply to
taxable years beginning after December 31, 1999.
SEC. 4. INCREASE IN UNIFIED ESTATE AND GIFT TAX
CREDITS.
(a) In General.--Section 2010(c) (relating to applicable credit
amount) is amended to read as follows:
``(c) Applicable Credit Amount.--For purposes of this section, the
applicable credit amount is the amount of the tentative tax which would
be determined under the rate schedule set forth in section 2001(c) if
the amount with respect to which such tentative tax is to be computed
were the applicable exclusion amount determined in accordance with the
following table:
``In the case of estates of decedents
The applicable
dying, and gifts made, during:
exclusion amount is:
2000 or thereafter................. $5,000,000.''
(b) Effective Date.--The amendments made by this section shall
apply to estates of decedents dying, and gifts made, after December 31,
1999.
SEC. 5. INCLUSION OF FARMLAND AS PART OF PRINCIPAL RESIDENCE.
(a) In General.--Subsection (d) of section 121 (relating to special
rules concerning the exclusion of gain from sale of principal
residence) is amended by adding at the end the following:
``(9) Farmland.--If, for each of the 5 taxable years
preceding the taxable year in which the sale or exchange of a
principal residence occurs, amounts were includible in gross
income of the taxpayer from a farming business conducted by the
taxpayer on real property contiguous to the principal
residence, then such real property shall, at the election of
the taxpayer, be treated as part of the principal residence for
purposes of this section. For purposes of the preceding
sentence, the term `contiguous' means adjacent or adjoining (at
1 or more corners), not taking into account any road right-of-
way.''
(b) Effective Date.--The amendment made by this section shall apply
to sales and exchanges occurring after the date of the enactment of
this Act.
SEC. 6. AVERAGING OF FARM INCOME.
(a) In General.--Section 1301 (relating to averaging of farm
income) is amended by redesignating subsections (b) and (c) as
subsections (c) and (d), respectively, and by inserting after
subsection (a) the following new subsection:
``(b) Election to Transfer Farm Income Among Taxable Years.--
``(1) In general.--In lieu of the election under subsection
(a) for a taxable year, a taxpayer may elect to increase or
decrease taxable income for the taxable year and the 3 previous
taxable years by transfering elected farm income from any of
such taxable years to any other of such taxable years.
``(2) Application to subsequent years.--Any adjustment
under this subsection for any taxable year shall be taken into
account in applying this section for any subsequent taxable
year.
``(3) Interest.--For purposes of applying sections 6601 and
6611 to returns modified under paragraph (1), the filing date
(as defined in section 6611(f)(4)(A)) for a returned modified
by reason of paragraph (1) shall be the same as the filing date
of the return for the current taxable year.''.
(b) Conforming Amendments.--
(1) The last sentence of subsection (a) of section 1301 is
amended by striking ``section'' the first place it appears and
inserting ``subsection''.
(2) Clause (ii) of section 1301(b)(1)(A) is amended by
inserting ``or (b)'' after ``subsection (a)''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1999.
SEC. 7. EXEMPTION FOR FARM INCOME FROM UNINCORPORATED FARM BUSINESSES
FROM ALTERNATIVE MINIMUM TAX.
(a) In General.--Section 55 (relating to alternative minimum tax
imposed) is amended by adding at the end the following:
``(f) Exemption for Unincorporated Farming Business Income.--
``(1) In general.--In the case of a taxpayer (other than a
corporation) described in paragraph (2), income from a farming
business engaged in by the taxpayer, and deductions relating to
the production of such income, shall not be taken into account
in determining alternative minimum taxable income for the
taxable year.
``(2) Gross receipts test.--A taxpayer is described in this
paragraph if the gross receipts of the taxpayer attributable to
such farming business--
``(A) meet the $5,000,000 gross receipts test of
section 448(c) for the first taxable year of the
taxpayer beginning after December 31, 1999, and
``(B) would meet such test for the taxable year and
each of the prior taxable years beginning after such
first taxable year if such test were applied by
substituting `$7,500,000' for `$5,000,000'.
``(3) Prospective application of minimum tax if income from
a farming business ceases to be small.--In the case of a
taxpayer whose income from a farming business is not taken into
account for any prior taxable year by reason of paragraph (1),
the application of this part for taxable years beginning with
the first taxable year for which farming income of the taxpayer
is so taken into account shall be determined in accordance with
rules similar to the rules of subparagraphs (A) through (G) of
subsection (e)(2).
``(4) Farming business.--For purposes of this subsection,
the term `farming business' has the meaning given such term by
section 263A(e)(4).
``(5) Aggregation rules.--For purposes of determining gross
receipts under paragraph (2)--
``(A) all related persons engaged in a farming
business shall be treated as 1 person, and
``(B) a person is related to another person if the
related person bears a relationship to such person
specified in section 147(a)(2) or the related person
and such person are engaged in trades or businesses
under common control (within the meaning of subsections
(a) and (b) of section 52).
For purposes of the preceding sentence, in applying section
267(b) or 707(b)(1) by reason of section 147(a)(2)(A), `10
percent' shall be substituted for `50 percent'.''
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 1999.
SEC. 8. CAPITAL GAIN REALIZED FROM TRANSFER OF FARM PROPERTY IN
COMPLETE OR PARTIAL SATISFACTION OF QUALIFIED FARM
INDEBTEDNESS EXCLUDED FROM GROSS INCOME.
(a) In General.--Part III of subchapter B of chapter 1 (relating to
items specifically excluded from gross income) is amended by
redesignating section 139 as section 140 and by inserting after section
138 the following new section:
``SEC. 139. CAPITAL GAIN REALIZED FROM TRANSFER OF FARM PROPERTY IN
COMPLETE OR PARTIAL SATISFACTION OF QUALIFIED FARM
INDEBTEDNESS.
``(a) In General.--Gross income of any taxpayer described in
subsection (d) does not include so much of the gain from the transfer
of farm property in complete or partial satisfaction of qualified farm
indebtedness as does not exceed $350,000.
``(b) Prior Gains and Discharges of Indebtedness Taken Into
Account.--
``(1) In general.--If, for any prior year--
``(A) gain from the transfer of farm property in
complete or partial satisfaction of qualified farm
indebtedness, or
``(B) a discharge of such indebtedness,
is excluded from the taxpayer's gross income under subsection
(a) of this section or section 108(g), respectively, subsection
(a) of this section shall be applied for the taxable year with
respect to such gain by reducing the dollar amount contained in
such subsection by such excluded prior year gains and
discharges.
``(2) Current year coordination with section 108.--
Subsection (a) of this section shall be applied for the taxable
year with respect to any gain by reducing the dollar amount
contained in such subsection (after any reduction under
paragraph (1)) by any amount excluded from gross income under
section 108 for such year.
``(c) Reduction of Tax Attributes.--
``(1) In general.--The amount excluded from gross income
under subsection (a) shall be applied to reduce the tax
attributes described under section 108(b)(2).
``(2) Coordination with section 108.--For purposes of this
subsection, the amount of tax attributes shall be determined
after any reduction under section 108(b) by reason of amounts
excluded from gross income under section 108(a)(1).
``(d) Taxpayer Described in This Subsection.--
``(1) In general.--A taxpayer is described in this
subsection if--
``(A) such taxpayer's modified adjusted gross
income for the taxable year in which the transfer of
farm property in complete or partial satisfaction of
qualified farm indebtedness occurs is less than 100
percent of the national median adjusted gross income
for such year,
``(B) more than 50 percent of the gross receipts of
the taxpayer for 6 of the 10 taxable years preceding
such taxable year are attributable to--
``(i)(I) the trade or business of farming
(within the meaning of section 2032A(e)(5)), or
``(II) the sale or lease of assets used in
such trade or business, or
``(ii) the activities described in both
subclauses (I) and (II) of clause (i),
``(C) such taxpayer materially participates (within
the meaning of section 2032A(e)(6)) in the trade or
business described in subparagraph (B)(i)(I), and
``(D) equity in all property held by the taxpayer
after such transfer is less than the greater of --
``(i) $25,000, or
``(ii) 150 percent of the excess (if any)
of--
``(I) the tax imposed by this
chapter determined as if this section
and section 108 did not apply to the
transfer, over
``(II) the tax imposed by this
chapter determined with regard to this
section and section 108 (if
applicable).
``(2) Modified adjusted gross income.--For purposes of this
subsection, the term `modified adjusted gross income' means
adjusted gross income--
``(A) determined with regard to this section and
section 108, and
``(B) increased by the amount of interest received
or accrued by the taxpayer during the taxable year
which is exempt from tax.
``(3) Equity.--For purposes of this subsection, the term
`equity' means, with respect to any property, an amount equal
to--
``(A) the fair market value of such property, minus
``(B) any indebtedness relating to such property.
``(e) Farm Property.--For purposes of this section, the term `farm
property' means real and personal property used by the taxpayer in the
trade or business of farming (within the meaning of section
2032A(e)(5)).
``(f) Qualified Farm Indebtedness.--For purposes of this section,
indebtedness of a taxpayer shall be treated as qualified farm
indebtedness if such indebtedness was incurred directly in connection
with the operation by the taxpayer of the trade or business of farming
(within the meaning of section 2032A(e)(5)).''
(b) Clerical Amendment.--The table of sections for part III of
subchapter B of chapter 1 is amended by striking the item relating to
section 139 and inserting the following:
``Sec. 139. Capital gain realized from
transfer of farm property in
complete or partial
satisfaction of qualified farm
indebtedness.
``Sec. 140. Cross references to other
Acts.''.
(c) Effective Date.--The amendments made by this section shall
apply to transfers occurring after December 31, 1999, in taxable years
ending after such date.
SEC. 9. EXCLUSION OF FARM RENTAL INCOME IN CONNECTION WITH CERTAIN
LEASE AGREEMENTS FROM NET EARNINGS FROM SELF-EMPLOYMENT.
(a) In General.--Section 1402(a)(1)(A) (relating to net earnings
from self-employment) is amended by striking ``an arrangement'' and
inserting ``a lease agreement''.
(b) Amendment to Social Security Act.--Section 211(a)(1)(A) of the
Social Security Act (42 U.S.C. 411(a)(1)(A)) is amended by striking
``an arrangement'' and inserting ``a lease agreement''.
(c) Effective Date.--The amendments made by this section shall
apply to income received in taxable years beginning after December 31,
1999.
SEC. 10. AGRICULTURAL PROGRAM IMPROVEMENTS.
(a) Value-Added Agricultural Products.--Section 310B of the
Consolidated Farm and Rural Development Act (7 U.S.C. 1932) is amended
by adding at the end the following:
``(h) Value-Added Agricultural Products.--In approving applications
for loans and grants authorized under this section, section 306(a)(11),
and other applicable provisions of this title (as determined by the
Secretary), the Secretary shall provide a high priority to projects
that encourage the creation of farmer-owned facilities that process
value-added agricultural products.''.
(b) Technical Assistance.--Section 793(c)(1) of the Federal
Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 2204f(c)(1))
is amended by adding at the end the following:
``(E) Technical assistance.--The Secretary may use
funds in the Account to provide technical assistance to
carry out any rural development activity for which
funds may be used under this paragraph.''.
(c) Extension Programs for Small- and Medium-Sized Farming
Operations.--Section 502(d) of the Rural Development Act of 1972 (7
U.S.C. 2662(d)) is amended--
(1) by inserting before ``Small farm'' the following:
``(1) In general.--''; and
(2) by adding at the end the following:
``(2) Market development education and technical
assistance.--To ensure the continued viability of small- and
medium-sized farming operations, extension programs shall, to
the maximum extent practicable, provide education and technical
assistance to owners and operators of small- and medium-sized
farming operations that is directed toward--
``(A) expanding marketing opportunities for the
farming operations through activities such as direct
farm-to-consumer markets, local value-added processing,
and farmer-owned cooperatives; and
``(B) providing entrepreneurial training and
development assistance relating to natural resource-
based activities.''.
SEC. 11. COOPERATIVE MARKETING INCLUDES VALUE-ADDED PROCESSING THROUGH
ANIMALS.
(a) In General.--Section 1388 (relating to definitions and special
rules) is amended by adding at the end the following:
``(k) Cooperative Marketing Includes Value-Added Processing Through
Animals.--For purposes of section 521 and this subchapter, the term
`marketing the products of members or other producers' includes feeding
the products of members or other producers to cattle, hogs, fish,
chickens, or other animals and selling the resulting animals or animal
products.''
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
SEC. 12. DECLARATORY JUDGMENT RELIEF FOR SECTION 521 COOPERATIVES.
(a) In General.--Subsection (a)(1) of section 7428 (relating to
declaratory judgments relating to status and classification of
organizations under section 501(c)(3), etc.) is amended by striking
``or'' at the end of subparagraph (B) and by adding at the end the
following:
``(D) with respect to the initial qualification or
continuing qualification of a cooperative (described in
section 521(b)) which is exempt from tax under section
521(a), or''.
(b) Effective Date.--The amendments made by this section shall
apply with respect to pleadings filed after the date of the enactment
of this Act but only with respect to determinations (or requests for
determinations) made after January 1, 1999.
SEC. 13. INCREASE IN THRESHOLD AMOUNT FOR CASH REMUNERATION FOR
PURPOSES OF PAYROLL TAX.
(a) In General.--Paragraph (8)(B) of section 3121(a) (relating to
definition of wages) is amended--
(1) in clause (i), by striking ``$150'' and inserting
``$3,000'', and
(2) in clause (ii), by striking ``$2,500'' and inserting
``$15,000''.
(b) Conforming Amendment.--The second sentence of section 3102(a)
is amended by striking ``$150'' and inserting ``$3,000''.
(c) Effective Date.--The amendments made by this section shall
apply to amounts paid in taxable years beginning after December 31,
1999.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S13979-13981)
Read twice and referred to the Committee on Finance.
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