S.930 - To amend the Internal Revenue Code of 1986 to exclude from gross income capital gains from the sale of certain farmland property which are reinvested in individual retirement plans. (119th Congress)
Summary
S.930 aims to amend the Internal Revenue Code of 1986 to allow taxpayers to exclude capital gains from the sale of farmland if those gains are reinvested into individual retirement plans (IRAs). This exclusion applies only when the sale is to a 'qualified farmer,' as defined in the bill. The bill also outlines specific conditions under which the tax exclusion would be revoked, such as if the farmer ceases to use the land for farming within ten years.
Expected Effects
The bill's passage would incentivize the sale of farmland to active farmers by offering a tax benefit to the seller. This could help to keep farmland in agricultural production. It would also provide a potential retirement savings benefit for landowners who sell their farmland.
Potential Benefits
- Encourages the transfer of farmland to active farmers, potentially preserving agricultural land.
- Provides a tax incentive for landowners to sell to farmers, supporting the agricultural sector.
- Allows landowners to reinvest capital gains into retirement accounts, enhancing their financial security.
- May help beginning farmers acquire land by making it more affordable.
- Could lead to increased agricultural production and food security.
Potential Disadvantages
- Potential for tax revenue loss due to the capital gains exclusion.
- Complexity in defining 'qualified farmland property' and 'qualified farmer' could lead to loopholes or disputes.
- The ten-year recapture provision might discourage long-term land use changes, even if economically beneficial.
- May disproportionately benefit wealthier landowners who have capital gains to reinvest.
- Could create an uneven playing field for farmers who do not qualify under the specific definitions.
Most Disadvantaged Areas:
Constitutional Alignment
The bill falls under the purview of Congress's power to tax and regulate commerce, as outlined in Article I, Section 8 of the Constitution. Specifically, it relates to the power to "lay and collect Taxes, Duties, Imposts and Excises" and to regulate commerce among the several states, as agriculture and land use have significant economic impacts. The bill does not appear to infringe upon any specific individual rights or liberties protected by the Bill of Rights.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).