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PUBLIC LAW 91-172-DEC. 30, 1969
[33 STAT
Subtitle B—Farm Losses, Etc. SEC. 211. GAIN FROM DISPOSITION OF PROPERTY USED IN FARMlNr WHERE FARM LOSSES OFFSET NONFARM INCOME. 68A Stat. 325. 26 USC 1231.
(a) IN GENERAL.—Part IV of subchapter P of chapter 1 (relatingto special rules for determining capital gains and losses) is amended by adding at the end thereof the following new section: "SEC. 1251. GAIN FROM DISPOSITION OF PROPERTY USED IN FARMING WHERE FARM LOSSES OFFSET NONFARM INCOME. " (a) CIRCUMSTANCES UNDER W H I C H SECTION APPLIES.—This section
shall apply with respect to any taxable year only if— " (1) there is a farm net loss for the taxable year, or " (2) there is a balance in the excess deductions account as of the close of the taxable year after applying subsection (b)(3)(A). " (b) EXCESS DEDUCTIONS ACCOUNT.—
" (1) REQUIREMENT.—Each taxpayer subject to this section shall for purposes of this section, establish and maintain an excess deductions account. " (2) ADDITIONS TO ACCOUNT.— " (A) GENERAL RULE.—There shall be added to the excess
72 Stat. 1650. 26 USC 1371.
deductions account for each taxable year an amount equal to the farm net loss. " (B) EXCEPTIONS.—In the case of an individual (other than a trust) and, except as provided in this subparagraph, in the case of an electing small business corporation (as defined in section 1371(b)), subparagraph (A) shall apply for a taxable year— "(i) only if the taxpayers nonfarm adjusted gross income for such year exceeds $50,000, and " (ii) only to the extent the taxpayer's farm net loss for such year exceeds $25,000. This subparagraph shall not apply to an electing small business corporation for a taxable year if on any day of such year a shareholder of such corporation is an individual who, for his taxable year with which or within which the taxable year of the corporation ends, has a farm net loss. " (C) MARRIED INDIVIDUALS.—In the case of a husband or wife who files a separate return, the amount specified in subparagraph (B)(i) shall be $25,000 in lieu of $50,000, and in subparagraph (B) (ii) shall be $12,500 in lieu of $25,000. This subparagraph shall not apply if the spouse of the taxpayer does not have any nonfarm adjusted gross income for the taxable year. " (D) NONFARM ADJUSTED GROSS INCOME.—For purposes of
this section, the term 'nonfarm adjusted gross income' means adjusted gross income (taxable income, in the case of an electing small business corporation) computed without regard to income or deductions attributable to the business of farming. "(3) SUBTRACTIONS FROM ACCOUNT.—If there is any amount m the excess deductions account at the close of any taxable year (determined before any amount is subtracted under this paragraph for such year) there shall be subtracted from the accountr-" (A) an amount equal to the farm net income for such year, plus the amount (determined as provided in regulations prescribed by the Secretary or his delegate) necessary to adjust the account for deductions which a i d not result in a reduction of the taxpayer's tax under this subtitle for the taxable year or any preceding taxable year, and
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