FARM LOSSES OF ELECTING SMALL BUSINESS CORPORATIONS.

SEC. 305. FARM LOSSES OF ELECTING SMALL BUSINESS CORPORATIONS. (a) Computation of Nonfarm Adjusted Gross Income—Section 1251 (b) (2) (B) is amended by striking out the last sentence and inserting in lieu thereof the following new sentences: “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 or is a shareholder of another electing small business corporation which has a farm net loss for its taxable year ending within such taxable year of the individual. For purposes of clause (i), in the case of an electing small business corporation the nonfarm adjusted gross income of the corporation shall be increased by the amount of the nonfarm adjusted gross income of that shareholder (on any day of the corporation’s taxable year) who has the highest amount of all such shareholders of nonfarm adjusted gross income for his taxable year with which or within which the taxable year of the corporation ends.” (b) Effective Date—The amendment made by this section shall apply to taxable years ending after the date of the enactment of this Act.