,i #aaith ,,congress #ast ,session ,h4 ,r4 #fhcf ,,in ,,the ,,house ,,of ,,representatives ,december #ah1 #bjbe,mr4 ,alford introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to exclude from gross income certain gains and other income related to use of farmland by beginning farmers4 #a4 ,short title ,this ,act may be cited as the ,beginning ,farmer ,tax ,incentive ,act4 #b4 ,certain gains and other income related to use of farmland by beginning farmers excluded from gross income 7a7 ,in general ,part ,,iii of subchapter ,b of chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after section #aci,l the following new section3 #aci,m4 ,certain gains and other income related to use of farmland by beginning farmers 7a7 ,capital gains 7#a7 ,in general ,gross income shall not include #dj percent of the gain from the sale or exchange of qualifying farmland held for more than #a year if such farmland is transferred to a beginning farmer in such sale or exchange4 7#b7 ,limitation ,the aggregate amount of gain excluded under paragraph 7#a7 with respect to any taxpayer for any taxable year shall not exceed the excess 7if any7 of-- 7,a7 #a1ejj1jjj1 over 7,b7 the aggregate amount of gain excluded under paragraph 7#a7 with respect to such taxpayer for the #d preceding taxable years4 7b7 ,application to leases and crop-,share arrangements 7#a7 ,in general ,gross income shall not include income from the lease or rental of qualifying farmland to a beginning farmer if the term of such lease or rental agreement is for a period not exceeding #aj years4 7#b7 ,limitation ,the amount excluded under paragraph 7#a7 by any taxpayer for any taxable year shall not exceed #be1jjj4 7c7 ,qualifying farmland 7#a7 ,in general ,the term qualifying farmland means property-- 7,a7 used as a farm for farming purposes 7within the meaning of section #bjcb;,a7b77#b77;,a771 and 7,b7 with respect to which1 during the #h-year period ending on the date of the sale or exchange described in subsection 7a77#a7 7or1 for purposes of subsection 7b77#a71 the date of the lease or rental71 there have been periods aggregating #e years or more during which-- 7i7 such real property was owned by the taxpayer1 a member of the taxpayer's family1 or the taxpayer's revocable grantor trust1 and used in the operation of a farm1 and 7ii7 there was material participation by the taxpayer or a member of the taxpayer's family in the operation of the farm4 7#b7 ,member of the family ,for purposes of this subsection1 the term member of the family has the same meaning given such term in section #dji7p77#d77;,d74 7#c7 ,special rules ,for purposes of paragraph 7#a77;,b7-- 7,a7 ,taxpayers who are retired or disabled ,rules similar to the rules of subparagraphs 7,a7 and 7,b7 of section #bjcb;,a7b77#d7 shall apply4 7,b7 ,surviving spouses ,rules similar to the rules of section #bjcb;,a7b77#e7 shall apply4 7d7 ,beginning farmer ,for purposes of this section-- 7#a7 ,in general ,the term beginning farmer means any individual who-- 7,a7 is a citizen of the ,united ,states1 and 7,b7 is certified by the ,secretary of ,agriculture 7the ,secretary1 in the case of clause 7i77 to satisfy one of the following requirements3 7i7 ,without regard to any taxable year beginning before such individual attained age #ah1 such individual had income or loss properly reported on ,schedule ,f for not less than #a and not more than #aj taxable years4 7ii7 ,such individual is approved for a beginner farmer loan through the ,farm ,service ,agency ,beginning ,farmer direct or guaranteed loan program4 7iii7 ,such individual has substantial farming knowledge and is the principal operator of a farm that constitutes new production agriculture4 7iv7 ,such individual is related within the fourth degree by blood1 marriage1 or adoption to the taxpayer from whom the farmland referred to in subsection 7a7 or 7b7 is acquired1 leased1 or rented4 7#b7 ,application to business entities ,the term beginning farmer shall include any corporation or partnership if more than #ej percent of the equity interests in such corporation or partnership are held 7directly or indirectly7 by one or more individuals described in paragraph 7#a74 7e7 ,aggregation rules ,rules similar to the rules of section #aid7;b77#b7 shall apply for purposes of subsections 7a77#b7 and 7b77#b7 of this section4 7f7 ,recapture 7#a7 ,in general ,if any amount is excluded from the gross income of the taxpayer with respect to the sale or exchange of qualifying farm land and such qualifying farmland ceases to be used as a farm for farming purposes 7within the meaning of section #bjcb;,a7b77#b77;,a77 during the #e-year period beginning on the date of such sale or exchange1 the tax imposed under this subtitle on such taxpayer for the taxable year which includes the date of such cessation shall be increased by the applicable percentage of the taxpayer's tax benefit with respect to such sale or exchange4 7#b7 ,applicable percentage ,for purposes of this subsection1 the term applicable percentage means-- 7,a7 #ajj percent in the case of the first year of the #e-year period referred to in paragraph 7#a71 7,b7 #hj percent in the case of the second year of such period1 7,c7 #fj percent in the case of the third year of such period1 7,d7 #dj percent in the case of the fourth year of such period1 and 7,e7 #bj percent in the case of the fifth year of such period4 7#c7 ,tax benefit ,for purposes of this subsection1 the term tax benefit means1 with respect to any sale or exchange1 the excess of-- 7,a7 the tax imposed under this subtitle for the taxpayer's taxable year which includes the date of such sale or exchange1 determined without regard to this section1 over 7,b7 such tax determined after the application of this section4 4 7b7 ,clerical amendment ,the table of sections for part ,,iii of subchapter ,b of chapter #a of such ,code is amended by inserting after the item relating to section #aci;,i the following new item3 ,sec4 #aci,m4 ,certain gains and other income related to use of farmland by beginning farmers4 4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 7d7 ,annual reports to ,congress ,the ,secretary of the ,treasury1 or the ,secretary's delegate1 shall annually submit to ,congress a written report reviewing the costs and benefits and containing statistical information regarding the exclusion of income under section #aci,m of the ,internal ,revenue ,code of #aihf 7as added by this section74 ,such report shall include the total amount of income excluded under such section1 and the total number of taxpayers excluding such income1 for the taxable years covered by such report4