Timber Tax Fairness Act of 2003

Timber Tax Fairness Act of 2003 - Amends the Internal Revenue Code to modify the application of the passive loss limitations to timber activities by establishing a special rule for closely held timber activities.

[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3346 Introduced in House (IH)]






108th CONGRESS
  1st Session
                                H. R. 3346

To amend the Internal Revenue Code of 1986 to modify the application of 
           the passive loss limitations to timber activities.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 20, 2003

  Mr. Herger 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 modify the application of 
           the passive loss limitations to timber activities.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Timber Tax Fairness Act of 2003''.

SEC. 2. APPLICATION OF PASSIVE LOSS LIMITATIONS TO TIMBER ACTIVITIES.

    (a) In General.--Subsection (h) of section 469 of the Internal 
Revenue Code of 1986 (relating to passive activity losses and credits 
limited) is amended by adding at the end the following new paragraph:
            ``(6) Special rule for closely held timber activities.--
                    ``(A) In general.--In the case of any closely held 
                timber activity the nature of which is that the 
                aggregate hours devoted to management of the activity 
                for any year is generally less than 100 hours, an 
                individual shall not fail to be treated as materially 
                participating in such activity solely by reason of the 
                fact that--
                            ``(i) such individual participates less 
                        than 100 hours in the management of such 
                        activity, or
                            ``(ii) any other individual--
                                    ``(I) receives compensation 
                                described in section 911(d)(2)(A) in 
                                consideration for services performed in 
                                connection with the management of the 
                                activity, or
                                    ``(II) performs services in 
                                connection with the management of the 
                                activity that exceed (by hours) the 
                                amount of such services performed by 
                                the individual.
                    ``(B) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Closely held activity.--An activity 
                        shall be treated as closely held if at least 80 
                        percent of the ownership interests in the 
                        activity is held--
                                    ``(I) by 5 or fewer individuals, or
                                    ``(II) by individuals who are 
                                members of the same family (within the 
                                meaning of section 2032A(e)(2)).
                            ``(ii) Timber activity.--The term `timber 
                        activity' means the planting, cultivating, 
                        caring, cutting, or preparation (other than 
                        milling) for market, of trees.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.
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