H. R. 6276
IN THE HOUSE OF REPRESENTATIVES
August 2, 2012
Mr. Landry introduced the following bill; which was referred to the Committee on Ways and Means
To amend the Internal Revenue Code of 1986 to provide for Commercial Fishing, Farm, and Ranch Risk Management Accounts, and for other purposes.
This Act may be cited as the
Commercial Fishing, Farm, and Ranch
Risk Management Act.
Commercial fishing, farm, and ranch risk management accounts
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:
Commercial fishing, farm, and ranch risk management accounts
In the case of an
individual engaged in an eligible farming business or commercial fishing, 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 Commercial Fishing, Farm, and Ranch
Risk Management Account (hereinafter in this section referred to as the
The amount which a taxpayer may pay into the CFFR 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 or commercial fishing.
For purposes of this section—
Eligible farming business
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.
commercial fishing has the
meaning given such term by section 3(4) of the Magnuson-Stevens Fishery
Conservation and Management Act (16 U.S.C. 1802(4)) but only if such fishing is
not a passive activity (within the meaning of section 469(c)) of the
For purposes of this section, the term
Fishing, Farm, and Ranch Risk Management Account or
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:
No contribution will be accepted for any taxable year in excess of the amount allowed as a deduction under subsection (a) for such year.
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.
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.
The assets of the trust will not be commingled with other property except in a common trust fund or common investment fund.
Inclusion of amounts distributed
Except as provided in paragraph (2), there shall be includible in the gross income of the taxpayer for any taxable year—
any amount distributed from a CFFR Account of the taxpayer during such taxable year, and
any deemed distribution under—
subsection (f)(1) (relating to deposits not distributed within 10 years),
subsection (f)(2) (relating to cessation in eligible farming business), and
subparagraph (B) or (C) of subsection (f)(3) (relating to prohibited transactions and pledging account as security).
Paragraph (1)(A) shall not apply to—
any distribution to the extent attributable to income of the Account, and
the distribution of any contribution paid during a taxable year to a CFFR 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.
Tax on deposits in account which are not distributed within 10 years
If, at the close of any taxable year, there is a nonqualified balance in any CFFR Account—
there shall be deemed distributed from such Account during such taxable year an amount equal to such balance, and
the taxpayer’s tax imposed by this chapter for such taxable year shall be increased by 10 percent of such deemed distribution.
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 9th preceding taxable year.
For purposes of this paragraph, distributions from a CFFR 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.
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 or commercial fishing, there shall be deemed distributed from the CFFR
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 3
consecutive taxable years for which the taxpayer is not engaged in an eligible
farming business or commercial fishing.
Certain rules to Apply
Rules similar to the following rules shall apply for purposes of this section:
Section 220(f)(8) (relating to treatment on death).
Section 408(e)(2) (relating to loss of exemption of account where individual engages in prohibited transaction).
Section 408(e)(4) (relating to effect of pledging account as security).
Section 408(g) (relating to community property laws).
Section 408(h) (relating to custodial accounts).
Time when payments deemed made
For purposes of this section, a taxpayer shall be deemed to have made a payment to a CFFR 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 (including extensions) for filing the return of tax for such taxable year.
purposes of this section, the term
individual shall not include
an estate or trust.
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.
The trustee of a CFFR 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.
Tax on excess contributions
Subsection (a) of
section 4973 of such Code (relating to tax on excess contributions to certain
tax-favored accounts and annuities) is amended by striking
the end of paragraph (4), by inserting
or at the end of
paragraph (5), and by inserting after paragraph (5) the following:
a CFFR Account (within the meaning of section 468C(d)), or
Section 4973 of such Code is amended by adding at the end the following:
Excess contributions to farm accounts
For purposes of this section, in
the case of a CFFR 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
CFFR Account in a distribution to which section 468C(e)(2)(B) applies shall be
treated as an amount not
The section heading for section 4973 of such Code is amended to read as follows:
Excess contributions to certain accounts, annuities, etc
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.
Tax on prohibited transactions
Subsection (c) of section 4975 of such Code (relating to tax on prohibited transactions) is amended by adding at the end the following:
Special rule for farm accounts
A person for whose benefit a CFFR 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 CFFR Account by reason of the application of section 468C(f)(3)(B) to such account.
Paragraph (1) of section 4975(e) of such Code is amended by redesignating subparagraphs (F) and (G) as subparagraphs (G) and (H), respectively, and by inserting after subparagraph (E) the following:
a CFFR Account described in section 468C(d),
Failure To provide reports on farm accounts
Paragraph (2) of section 6693(a) of such Code (relating to failure to provide reports on certain tax-favored accounts or annuities) is amended by redesignating subparagraphs (D) and (E) as subparagraphs (E) and (F), respectively, and by inserting after subparagraph (C) the following:
section 468C(g) (relating to CFFR Accounts),
The table of sections for subpart C of part II of subchapter E of chapter 1 of such Code is amended by inserting after the item relating to section 468B the following:
Sec. 468C. Commercial fishing, farm, and ranch risk management accounts.
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.