GAIN FROM DISPOSITION OF FARM LAND.

SEC. 214. GAIN FROM DISPOSITION OF FARM LAND. (a) In General.—Part IV of subchapter P of chapter 1 (relating to special rules for determining capital gains and losses) is amended by adding after section 1251 (added by section 211 of this Act) the following new section: “SEC. 1252. GAIN FROM DISPOSITION OF FARM LAND. “(a) General Rule.— “(1) Ordinary income.—Except as otherwise provided in this section, if farm land which the taxpayer has held for less than 10 years is disposed of during a taxable year beginning after December 31, 1969, the lower of— “(A) the applicable percentage of the aggregate of the deductions allowed under sections 175 (relating to soil and water conservation expenditures) and 182 (relating to expenditures by farmers for clearing land) for expenditures made by the taxpayer after December 31, 1969, with respect to the farm land or 83 Stat. 573 “(B) the excess of— “(i) the amount realized (in the case of a sale, exchange, or involuntary conversion), or the fair market value of the farm land (in the case of any other disposition), over “(ii) the adjusted basis of such land, shall be treated as gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231. Such gain shall be recognized notwithstanding any other provision of this subtitle, except that this section shall not apply to the extent section 1251 applies to such gain. “(2) Farmland.—For purposes of this section, the term ‘farm land’ means any land with respect to which deductions have been allowed under sections 175 (relating to soil and water conservation expenditures) or 182 (relating to expenditures by farmers for clearing land). “(3) Applicable percentage.—For purposes of this section— “If the farm land is disposed of— The applicable percentage is— Within 5 years after the date it was acquired 100 percent. Within the sixth year after it was acquired 80 percent. Within the seventh year after it was acquired 60 percent. Within the eighth year after it was acquired 40 percent. “(b) Special Rules.—Under regulations prescribed by the Secretary or his delegate, rules similar to the rules of section 1245 shall be applied for purposes of this section.” (b) Clerical Amendment.—The table of sections for part IV of subchapter P of chapter 1 is amended by adding at the end thereof the following: “Sec. 1252. Gain from the disposition of farm land.” (c) Effective Date.—The amendments made by this section shall apply to taxable years beginning after December 31, 1969.