Page:United States Statutes at Large Volume 90 Part 2.djvu/68

 90 STAT. 1536

26 USC 1251 note.

PUBLIC LAW 94-455—OCT. 4, 1976 manner as the Secretary shall prescribe, applying this paragraph to the farm n e t income, and the amounts described in subparagraph (B), of the transferor corporation and the transferee corporation on an aggregate basis.". (3) The amendments made by this subsection shall apply to transfers occurring after December 31, 1975. SEC. 207. LIMITATIONS ON DEDUCTIONS IN CASE OF FARMING SYNDICATES; CAPITALIZATION OF CERTAIN ORCHARD AND VINEYARD EXPENSES; AND METHOD OF ACCOUNTING FOR CORPORATIONS ENGAGED IN FARMING. (a) PfiEPAro E X P E N S E S. —

26 USC 464.

(1) IN GENERAL.—Subpart C of part II of subchapter E of chapter 1 (relating to taxable year for which deduction taken) is amended by inserting after section 463 the following new section: "SEC. 464. LIMITATIONS ON DEDUCTIONS IN CASE OF FARMING SYNDICATES. "(a)

GENERAL RULE. — I n the case of

any f a r m i n g syndicate

(as

defined in subsection (c)), a deduction (otherwise allowable under this chapter) for amounts paid for feed, seed, fertilizer, or other similar farm supplies shall only be allowed for the taxable year in which such feed, seed, fertilizer, or other supplies are actually used or consumed, or, if later, for the taxable year for which allowable as a deduction (determined without regard to this section). "(b)

CERTAIN POULTRY E X P E N S E S. — I n the case of any

farming

syndicate (as defined in subsection (c)) — " (1) the cost of poultry (including egg-laying hens and baby chicks) purchased for use in a trade o r business (or both for use in a trade or business and for sale) shall be capitalized and deducted ratably over the lesser of 12 months o r their useful life in the trade or business, and " (2) the cost of poultry purchased for sale shall be deducted for the taxable year in which the poultry is sold or otherwise disposed of. "(c)

F A R M I N G SYNDICATE D E F I N E D. —

" (1) IN GENERAL.—For purposes of this section, the term 'farming syndicate' means— " (A) a partnership or any other enterprise other than a corporation which is not an electing small business corporation (as defined in section 1371(b)) engaged in the trade or business of farming, if at any time interests in such partnership or enterprise have been offered for sale in any offering required to be registered with any Federal o r State agency having authority to regulate the offering of securities for sale, or " (B) a partnership or any other enterprise other than a corporation which is not an electing small business corporation (as defined in section 1371(b)) engaged in the trade or business of farming, if more than 35 percent of the losses during any period are allocable to limited part n e r s or limited entrepreneurs. "(2)

HOLDINGS ATTRIBUIABLE TO ACTIVE MANAGEMENT.—For

purposes of paragraph (1)(B), the following shall be treated as an interest which is not held by a limited part n e r o r a limited entrepreneur: " (A) in the case of any individual who has actively participated ( for a period of not less than 5 years) i n the man-

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