Page:United States Statutes at Large Volume 83.djvu/597

 PUBLIC LAW 91-172-DEC. 30, 1969

63 STAT.1

569

" (4) LiBa: KIND EXCHANGES; INVOLUNTARY CONVERSION, E T C. —

If property is disposed of and gain (determined without regard to this section) is not recognized in whole or in part under section Stat. 302. 1031 or 1033, then the amount of gain taken into account by the 68Au s e 1031, 26 transferor under subsection (c)(1) shall not exceed the sum of— 1033. " (A) the amount of gain recognized on such disposition (determined without regard to this section), plus " (B) the fair market value of property acquired with respect to which no gain is recognized under subparagraph (A), but which is not farm recapture property. "(5)

PARTNERSHIPS.—

" (A) IN GENERAL.—In the case of a partnership, each partner shall take into account separately his distributive share of the partnership's farm net losses, gains from dispositions of farm recapture property, and other items in applying this section to the partner. " (B) TRANSFERS TO PARTNERSHIPS.—If farm recapture property is contributed to a partnership and gain (determined without regard to this section) is not recognized under section 721, then the amount of gain taken into account by the transferor under subsection (c)(1) shall not exceed the excess of the fair market value of farm recapture property transferred over the fair market value of the partnership interest attributable to such property. If the partnership agreement provides for an allocation of gain to the contributing partner with respect to farm recapture property contributed to the partnership (as provided in section 704(c)(2)), the partnership interest of the contributing partner shall be deemed to be attributable to such property. "(6)

PROPERTY TRANSFERRED TO CONTROLLED CORPORATIONS.—

Except for transactions described in subsection (b)(5)(A), in the case of a transfer, described in paragraph (3), of farm recapture property to a corporation, stock or securities received by a transferor in the exchange shall be farm recapture property to the extent attributable to the fair market value of farm recapture property (or, in the case of land, if less, the adjusted basis plus the potential gain (as defined in subsection (e)(5)) on farm recapture property) contributed to the corporation by such transferor. " (e) DEFINITIONS.—For purposes of this section— "(1) FARM RECAPTURE PROPERTY.—The term 'farm recapture property' means— " (A) any property (other than section 1250 property) described in paragraph (1) (relating to business property held for more than 6 months), (3) (relating to livestock), or (4) (relating to an unharvested crop) of section 1231(b) which is or has been used in the trade or business of farming by the taxpayer or by a transferor in a transaction described in subsection (b)(5), and " (B) any property the basis of which in the hands of the taxpayer is determined with reference to the adjusted basis of property which was farm recapture property in the hands of the taxpayer within the meaning of subparagraph (A). "(2) FARM NET LOSS.—The term 'farm net loss' means the amount by which— " (A) the deductions allowed or allowable by this chapter which are directly connected wnth the carrying on of the trade or business of farming, exceed

26 USC 721.

26 USC 704.

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