H.R. 1752 (105th): To amend the Internal Revenue Code of 1986 to provide for the nonrecognition of gain on sale ...

...of stock to certain farmers’ cooperatives.

105th Congress, 1997–1998. Text as of May 27, 1997 (Introduced).

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HR 1752 IH

105th CONGRESS

1st Session

H. R. 1752

To amend the Internal Revenue Code of 1986 to provide for the nonrecognition of gain on sale of stock to certain farmers’ cooperatives.

IN THE HOUSE OF REPRESENTATIVES

May 27, 1997

Mr. HULSHOF (for himself, Mr. STENHOLM, Mr. CRAPO, Mr. SMITH of Oregon, Mr. ENGLISH of Pennsylvania, Mr. BARRETT of Nebraska, Mrs. EMERSON, Mr. HERGER, Mrs. THURMAN, Mr. COMBEST, Mr. MINGE, Mr. SENSENBRENNER, Mr. CANADY of Florida, Mr. LAHOOD, and Mr. EWING) introduced the following bill; which was referred to the Committee on Ways and Means


A BILL

To amend the Internal Revenue Code of 1986 to provide for the nonrecognition of gain on sale of stock to certain farmers’ cooperatives.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. NONRECOGNITION OF GAIN ON SALE OF STOCK TO CERTAIN FARMERS’ COOPERATIVES.

    (a) APPLICATION OF SECTION 1042 TO CERTAIN FARMERS’ COOPERATIVES- Section 1042 of the Internal Revenue Code of 1986 (relating to sales of stock to employee stock ownership plans or certain cooperatives) is amended by adding at the end the following new subsection:

    ‘(g) APPLICATION OF SECTION TO SALES OF STOCK IN AGRICULTURAL REFINERS AND PROCESSORS TO ELIGIBLE FARM COOPERATIVES-

      ‘(1) IN GENERAL- This section shall apply to the sale of stock of a qualified refiner or processor to an eligible farmers’ cooperative.

      ‘(2) QUALIFIED REFINER OR PROCESSOR- For purposes of this subsection, the term ‘qualified refiner or processor’ means a domestic corporation--

        ‘(A) substantially all of the activities of which consist of the active conduct of the trade or business of refining or processing agricultural or horticultural products, and

        ‘(B) which purchases more than one-half of such products to be refined or processed from farmers who make up the eligible farmers’ cooperative which is purchasing stock in the corporation in a transaction to which this subsection is to apply.

      ‘(3) ELIGIBLE FARMERS’ COOPERATIVE- For purposes of this section, the term ‘eligible farmers’ cooperative’ means an organization to which part I of subchapter T applies which is engaged in the marketing of agricultural or horticultural products.

      ‘(4) SPECIAL RULES- In applying this section to a sale to which paragraph (1) applies--

        ‘(A) the eligible farmers’ cooperative shall be treated in the same manner as a cooperative described in subsection (b)(1)(B),

        ‘(B) subsection (b)(2) shall be applied by substituting ‘100 percent’ for ‘30 percent’ each place it appears,

        ‘(C) the determination as to whether any stock in the domestic corporation is a qualified security shall be made without regard to whether the stock is an employer security or to subsection (c)(1)(A), and

        ‘(D) subsection (c)(7) shall not apply.’

    (b) EFFECTIVE DATE- The amendment made by this section shall apply to sales after the date of the enactment of this Act.