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United States Code (Last Updated: May 24, 2014) |
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Title 26. INTERNAL REVENUE CODE |
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SubTitle A. Income Taxes |
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Chapter 1. NORMAL TAXES AND SURTAXES |
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SubChapter Q. Readjustment of Tax Between Years and Special Limitations |
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Part I. INCOME AVERAGING |
§ 1301. Averaging of farm income
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(a) In general At the election of an individual engaged in a farming business or fishing business, the tax imposed by section 1 for such taxable year shall be equal to the sum of— (1) a tax computed under such section on taxable income reduced by elected farm income, plus (2) the increase in tax imposed by section 1 which would result if taxable income for each of the 3 prior taxable years were increased by an amount equal to one-third of the elected farm income. Any adjustment under this section for any taxable year shall be taken into account in applying this section for any subsequent taxable year. (b) Definitions In this section— (1) Elected farm income (A) In general The term “elected farm income” means so much of the taxable income for the taxable year— (i) which is attributable to any farming business or fishing business; and (ii) which is specified in the election under subsection (a). (B) Treatment of gains For purposes of subparagraph (A), gain from the sale or other disposition of property (other than land) regularly used by the taxpayer in such a farming business or fishing business for a substantial period shall be treated as attributable to such a farming business or fishing business.
(2) Individual The term “individual” shall not include any estate or trust.
(3) Farming business The term “farming business” has the meaning given such term by section 263A(e)(4).
(4) Fishing business The term “fishing business” means the conduct of commercial fishing as defined in section 3 of the Magnuson-Stevens Fishery Conservation and Management Act (16 U.S.C. 1802).
(c) Regulations The Secretary shall prescribe such regulations as may be appropriate to carry out the purposes of this section, including regulations regarding— (1) the order and manner in which items of income, gain, deduction, or loss, or limitations on tax, shall be taken into account in computing the tax imposed by this chapter on the income of any taxpayer to whom this section applies for any taxable year, and (2) the treatment of any short taxable year.
Prior Provisions
A prior section 1301, added Pub. L. 88–272, title II, § 232(a),
Another prior section 1301, act Aug. 16, 1954, ch. 736, 68A Stat. 334, related to compensation from an employment, defined “an employment”, and stated the rule with respect to partners, prior to the general revision of this part by Pub. L. 88–272.
A prior section 1302, added Pub. L. 88–272, title II, § 232(a),
Another prior section 1302, act Aug. 16, 1964, ch. 736, 68A Stat. 335, related to income from an invention or artistic work, prior to the general revision of this part by Pub. L. 88–272.
A prior section 1303, added Pub. L. 88–272, title II, § 232(a),
Another prior section 1303, acts Aug. 16, 1954, ch. 736, 68A Stat. 335,
A prior section 1304, added Pub. L. 88–272, title II, § 232(a),
Another prior section 1304, act Aug. 11, 1955, ch. 804, § 1(a), 69 Stat. 688, related to compensatory damages for patent infringement, prior to the general revision of this part by Pub. L. 88–272.
A prior section 1305, added Pub. L. 88–272, title II, § 232(a),
Another prior section 1305, act
A prior section 1306, Pub. L. 85–866, title I, § 58(a),
A prior section 1307, act Aug. 16, 1954, ch. 736, 68A Stat. 336, § 1307, formerly § 1304; renumbered § 1305, Aug. 11, 1955, ch. 804, § 1(a), 69 Stat. 688; renumbered § 1306,
Amendments
2004—Subsec. (a). Pub. L. 108–357, § 314(b)(1), substituted “farming business or fishing business” for “farming business” in introductory provisions.
Subsec. (b)(1)(A)(i), (B). Pub. L. 108–357, § 314(b)(2), inserted “or fishing business” after “farming business” wherever appearing.
Subsec. (b)(4). Pub. L. 108–357, § 314(b)(3), added par. (4).
Effective Date Of Amendment
Amendment by Pub. L. 108–357 applicable to taxable years beginning after
Effective Date
Pub. L. 105–34, title IX, § 933(c),