90 STAT. 1860
PUBLIC LAW 94-455—OCT. 4, 1976 owner or lessee of such real property or by persons employed by such owner or lessee for the purpose of operating or maintaining such real property, and roads, buildings, and other structures and improvements functionally related to the qualified use shall be treated as real property devoted to the qualified use. " (4) F A R M. — The term ' f a r m ' includes stock, dairy, poultry, fruit, furbearing animal, and truck farms, plantations, ranches, nurseries, ranges, greenhouses or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards and woodlands. " (5) FARMING PURPOSES.—The term 'farming purposes' means— " (A) cultivating the soil or raising or harvesting any agricultural or horticultural commodity (including the raising, shearing, feeding, caring for, training, and management of animals) on a f a r m; " (B) handling, drying, packing, grading, or storing on a f a r m any agricultural o r horticultural commodity i n its unmanufactured state, but only if the owner, tenant, or operator of the farm regularly produces more than one-half of the commodity so t r e a t e d; and " (C)(i) the planting, cultivating, caring for, or cutting of trees, or " ( i i) the preparation (other than milling) of trees for market. " (6) MATERIAL PARTICIPATION.—Material participation shall be
26 USC 1402.
determined in a manner similar to the manner used for purposes of paragraph (1) of section 1402(a) (relating to net earnings from self-employment). " (7) METHOD o r VALUING FARMS.—
" (A) IN GENERAL.—Except as provided i n subparagraph (B), the value of a farm for farming purposes shall be determined by dividing— " (i) the excess of the average annual gross cash rental for comparable land used for farming purposes and located in the locality of such farm over the average annual State and local real estate taxes for' such comparable land, by " ( i i) the average annual effective interest rate for all new Federal L and Bank loans. For purposes of the preceding sentence, each average annual computation shall be made on the basis of the 5 most recent calendar years ending before the date of the decedent's death. " (B) EXCEPTION.—The formula provided by subparagraph (A) shall not be used— " (i) where it is established that there is no comparable land from which the average annual gross cash rental may be determined, or " ( i i) where the executor elects to have the value of the farm for f a r m i n g purposes determined under paragraph (8). " (8) M E T H O D OF VALUING CLOSELY HELD BUSINESS INTERESTS,
ETC.—In any case to which paragraph (7)(A) does not apply, the following factors shall apply in determining the value of any qualified real property: " (A) The capitalization of income which the property can be expected to yield for farming or closely held business pur-
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