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Full Text: W&M Announces Action on H.R. 2513 on Farmer Cooperatives, Subpart F Exception Provisions

SEP. 24, 1997

No. FC 14-A

DATED SEP. 24, 1997
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Citations: No. FC 14-A
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September 24, 1997

ARCHER ANNOUNCES COMMITTEE ACTION ON H.R. 2513,

 

A BILL TO PROVIDE FOR THE TREATMENT OF SALES

 

OF PROCESSING FACILITIES TO FARMER COOPERATIVES

 

AND FOR EXCEPTIONS FROM SUBPART F FOR

 

CERTAIN ACTIVE FINANCING INCOME

[1] Congressman Bill Archer (R-TX), Chairman of the Committee on Ways and Means, today announced that on Tuesday, September 23, 1997, the Committee ordered favorably reported, as amended, H.R. 2513, a bill to amend the Internal Revenue Code of 1986 to restore and modify the provision of the Taxpayer Relief Act of 1997 relating to exempting active financing income from foreign personal holding company income and to provide for the nonrecognition of gain on the sale of stock in agricultural processors to certain farmers' cooperatives, by voice vote.

DESCRIPTION OF H.R. 2513 AS APPROVED:

[2] The bill contains the following provisions which are intended to restore and modify certain provisions of the Taxpayer Relief Act of 1997 that were canceled pursuant to the Line Item Veto Act:

1. PROVISION ALLOWING THE TAX-FREE ROLLOVER OF GAIN ON THE SALE

 

OF STOCK IN CERTAIN PROCESSING OR REFINING COMPANIES TO CERTAIN

 

FARMERS' COOPERATIVES. The provision would allow a taxpayer to be

 

able to defer the gain realized on the sale of certain stock in a

 

processing or refining company to certain cooperatives. Stringent

 

technical requirements would have to be met in order to qualify for

 

this provision. The maximum amount of gain that would be allowed to

 

be deferred under this provision would be $75 million in any 1 year.

 

The provision would also impose special restrictions on large

 

cooperatives with revenues over $1 billion and on the kinds of assets

 

the sales proceeds may be invested in, in order to qualify for the

 

provision's tax-free rollover benefits. The provision would apply to

 

sales after December 31, 1997.

2. ACTIVE FINANCING INCOME PROVISION. The provision would expand

 

the circumstances in which businesses engaged in the active conduct

 

of the banking, financing, insurance, or a similar business may

 

qualify for deferral under the subpart-F provisions of the tax code.

 

While expanding deferral in certain specified cases, the provision

 

would, in other cases, limit the securities dealers exception of new

 

tax code section 901(k) (relating to certain foreign tax credit

 

holding period requirements). The provision also contains an anti-

 

abuse rule that would allow transactions, or a series of

 

transactions, to be disregarded if one of the transaction's principal

 

purposes is to qualify for the new deferral rules. This provision

 

would be in effect for 1 year (through 1998).
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