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H.R.4885
Rural America Prosperity Act of 2000 (Introduced in the
House)
HR 4885 IH
106th CONGRESS
2d Session
H. R. 4885
To provide tax and
regulatory relief for farmers and to improve the competitiveness of American
agricultural commodities and products in global markets.
IN THE HOUSE OF REPRESENTATIVES
July 19, 2000
Mr. BOEHNER (for himself, Mr. BARRETT of Nebraska, Mr. COOKSEY, Mr. EWING,
Mr. GUTKNECHT, Mr. LAHOOD, Mr. LATHAM, Mr. LUCAS of Oklahoma, Mr. NETHERCUTT,
Mr. NUSSLE, Mr. PETERSON of Minnesota, Mr. SCHAFFER, Mr. SIMPSON, Mr. THUNE, and
Mr. WALDEN of Oregon) introduced the following bill; which was referred to the
Committee on Ways and Means, and in addition to the Committees on Agriculture,
Rules, and Government Reform, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall within the
jurisdiction of the committee concerned
A BILL
To provide tax and
regulatory relief for farmers and to improve the competitiveness of American
agricultural commodities and products in global markets.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE- This Act may be cited as the `Rural America Prosperity
Act of 2000'.
(b) TABLE OF CONTENTS- The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I--TAX RELIEF FOR
FARMERS
Subtitle A--General Tax
Provisions
Sec. 101. Deduction for 100 percent of health insurance costs of
self-employed individuals.
Sec. 102. Exclusion of gain from sale of farmland.
Sec. 103. Income averaging for farmers not to increase alternative
minimum tax liability.
Sec. 104. Farm and ranch risk management accounts.
Subtitle B--Estate and Gift Tax Relief
Sec. 111. Repeal of
estate, gift, and generation-skipping taxes.
Sec. 112. Termination of step up in basis at death .
Sec. 113. Carryover basis at death .
Sec. 114. Additional reductions of estate and gift tax rates.
Sec. 115. Unified credit against estate and gift taxes replaced with
unified exemption amount.
Sec. 116. Deemed allocation of GST exemption to lifetime transfers to
trusts; retroactive allocations.
Sec. 117. Severing of trusts.
Sec. 118. Modification of certain valuation rules.
Sec. 119. Relief provisions.
Sec. 120. Expansion of estate tax rule for conservation
easements.
TITLE II--STUDY OF COSTS OF REGULATIONS ON FARMERS, RANCHERS, AND
FORESTERS
Sec. 202. Comptroller General study of regulations.
Sec. 203. Response of Secretary of Agriculture.
TITLE III--EXTENSION OF TRADE AUTHORITIES PROCEDURES FOR RECIPROCAL TRADE
AGREEMENTS
Sec. 302. Trade negotiating objectives.
Sec. 303. Trade agreements authority.
Sec. 305. Implementation of trade agreements.
Sec. 306. Treatment of certain trade agreements.
Sec. 307. Conforming amendments.
TITLE IV--AGRICULTURAL TRADE FREEDOM
Sec. 403. Agricultural commodities, livestock, and products exempt from
unilateral agricultural sanctions.
Sec. 404. Sale or barter of food assistance.
TITLE I--TAX RELIEF FOR
FARMERS
Subtitle A--General Tax
Provisions
SEC. 101. DEDUCTION FOR 100 PERCENT OF HEALTH INSURANCE COSTS OF
SELF-EMPLOYED INDIVIDUALS.
(a) IN GENERAL- Paragraph (1) of section 162(l) of the Internal Revenue
Code of 1986 (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 100 percent of the amount
paid during the taxable year for insurance which constitutes medical care
for the taxpayer, his spouse, and dependents.'.
(b) EFFECTIVE DATE- The amendment made by this section shall apply to
taxable years beginning after December 31, 2000.
SEC. 102. EXCLUSION OF GAIN FROM SALE OF FARMLAND.
(a) IN GENERAL- Part III of subchapter B of chapter 1 of the Internal
Revenue Code of 1986 (relating to items specifically excluded from gross
income) is amended by inserting after section 121 the following:
`SEC. 121A. EXCLUSION OF GAIN FROM SALE OF QUALIFIED FARM PROPERTY.
`(a) EXCLUSION- In the case of a natural person, gross income shall not
include gain from the sale or exchange of qualified farm property.
`(1) IN GENERAL- The amount of gain excluded from gross income under
subsection (a) with respect to any taxable year shall not exceed $500,000
($250,000 in the case of a married individual filing a separate return),
reduced by the aggregate amount of gain excluded under subsection (a) for
all preceding taxable years.
`(2) SPECIAL RULE FOR JOINT RETURNS- The amount of the exclusion under
subsection (a) on a joint return for any taxable year shall be allocated
equally between the spouses for purposes of applying the limitation under
paragraph (1) for any succeeding taxable year.
`(c) QUALIFIED FARM PROPERTY- For purposes of this section--
`(1) IN GENERAL- 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 by the taxpayer or a member of the
family of the taxpayer as a farm for farming purposes, and
`(B) there was material participation by the taxpayer (or such a
member) in the operation of the farm.
`(2) OTHER DEFINITIONS- 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).
`(3) SPECIAL RULES- Rules similar to the rules of paragraphs (4) and (5)
of section 2032A(b) and paragraphs (3) and (6) of section 2032A(e) shall
apply.
`(d) OTHER RULES- For purposes of this section, rules similar to the rules
of subsection (e) and subsection (f) of section 121 shall apply.'
(b) CONFORMING AMENDMENT- The table of sections for part III of subchapter
B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting
after the item relating to section 121 the following:
`Sec. 121A. Exclusion of gain from sale of qualified farm property.'
(c) EFFECTIVE DATE- The amendments made by this section shall apply to any
sale or exchange after the date of the enactment of this Act in taxable years
ending after such date.
SEC. 103. INCOME AVERAGING FOR FARMERS NOT TO INCREASE ALTERNATIVE MINIMUM
TAX LIABILITY.
(a) IN GENERAL- Section 55(c) of the Internal Revenue Code of 1986
(defining regular tax ) is
amended by redesignating paragraph (2) as paragraph (3) and by inserting after
paragraph (1) the following:
`(2) COORDINATION WITH INCOME AVERAGING FOR FARMERS- Solely for purposes
of this section, section 1301 (relating to averaging of farm income) shall
not apply in computing the regular tax .'
(b) EFFECTIVE DATE- The amendment made by this section shall apply to
taxable years beginning after December 31, 1997.
SEC. 104. FARM AND RANCH RISK MANAGEMENT ACCOUNTS.
(a) IN GENERAL- Subpart C of part II of subchapter E of chapter 1 of the
Internal Revenue Code of 1986 (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.
`(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 (other than distributions of current income) shall be
treated as made from deposits in the order in which such deposits were
made, beginning with the earliest deposits.
`(2) CESSATION IN ELIGIBLE 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 220(f)(8) (relating to treatment on death ).
`(B) Section 408(e)(2) (relating to loss of exemption of account where
individual engages in prohibited transaction).
`(C) Section 408(e)(4) (relating to effect of pledging account as
security).
`(D) Section 408(g) (relating to community property laws).
`(E) 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 on or before the due date (without regard to
extensions) for filing the return of tax for such taxable year.
`(5) INDIVIDUAL- For purposes of this section, the term `individual'
shall not include an estate or trust.
`(6) DEDUCTION NOT ALLOWED FOR SELF-EMPLOYMENT TAX - The deduction allowable by
reason of subsection (a) shall not be taken into account in determining an
individual's net earnings from self-employment (within the meaning of
section 1402(a)) for purposes of chapter 2.
`(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) TAX ON EXCESS
CONTRIBUTIONS-
(1) Subsection (a) of section 4973 of the Internal Revenue Code of 1986
(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 of such Code, 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 of such Code is amended to read
as follows:
`SEC. 4973. EXCESS CONTRIBUTIONS TO CERTAIN ACCOUNTS, ANNUITIES, ETC.'.
(4) The table of sections for chapter 43 of such Code is amended by
striking the item relating to section 4973 and inserting the
following:
`Sec. 4973. Excess contributions to certain accounts, annuities, etc.'.
(c) TAX ON PROHIBITED
TRANSACTIONS-
(1) Subsection (c) of section 4975 of the Internal Revenue Code of 1986
(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) of such Code 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),'.
(d) FAILURE TO PROVIDE REPORTS ON FARRM ACCOUNTS- Paragraph (2) of section
6693(a) of the Internal Revenue Code of 1986 (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),'.
(e) CLERICAL AMENDMENT- The table of sections for subpart C of part II of
subchapter E of chapter 1 of the Internal Revenue Code of 1986 is amended by
inserting after the item relating to section 468B the following:
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