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

SEC. 968. NONRECOGNITION OF GAIN ON SALE OF STOCK TO CERTAIN FARMERS’ COOPERATIVES. (a) In General.—Section 1042 (relating to sales of stock to employee stock ownership plans or certain cooperatives) is amended by adding at the end the following new subsection:111 STAT. 896 “(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, during the 1-year period ending on the date of the sale, purchases more than one-half of such products to be refined or processed from— “(i) 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, or “(ii) such cooperative. “(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 and 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) paragraphs (2)(D) and (7) of subsection (c) shall not apply.”. (b) Effective Date.—The amendment made by this section shall apply to sales after December 31, 1997.