§ 1252. Gain from disposition of farm land
(a)
General rule
(1)
Ordinary income
Except as otherwise provided in this section, if farm land which the taxpayer has held for less than 10 years is disposed of during a taxable year beginning after December 31, 1969, the lower of—
(A)
the applicable percentage of the aggregate of the deductions allowed under sections
175 (relating to soil and water conservation expenditures) and 182 (relating to expenditures by farmers for clearing land) for expenditures made by the taxpayer after December 31, 1969, with respect to the farm land or
(B)
the excess of—
(i)
the amount realized (in the case of a sale, exchange, or involuntary conversion), or the fair market value of the farm land (in the case of any other disposition), over
shall be treated as ordinary income. Such gain shall be recognized notwithstanding any other provision of this subtitle.
(2)
Farm land
For purposes of this section, the term “farm land” means any land with respect to which deductions have been allowed under sections
175 (relating to soil and water conservation expenditures) or 182 (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986).
(3)
Applicable percentage
For purposes of this section—
| If the farm land is disposed of— | The applicablepercentage is— |
|---|---|
| Within 5 years after the date it was acquired | 100 percent. |
| Within the sixth year after it was acquired | 80 percent. |
| Within the seventh year after it was acquired | 60 percent. |
| Within the eighth year after it was acquired | 40 percent. |
| Within the ninth year after it was acquired | 20 percent. |
| 10 years or more years after it was acquired | 0 percent. |
(b)
Special rules
Under regulations prescribed by the Secretary, rules similar to the rules of section
1245 shall be applied for purposes of this section.