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2008 Farm Bill Side-By-Side

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Title XV: Trade and Tax Provisions

Provision name:

Permanent Disaster Assistance

Previous Legislation 2008 Farm Bill

Supplemental Agricultural Disaster Assistance (SADA). See Title XII, Supplemental Agricultural Disaster Assistance (SADA).

 

Agricultural Disaster Relief Trust Fund to fund SADA.

 
Previous Legislation 2008 Farm Bill

No similar provision.

Creates Agricultural Disaster Relief Trust Fund (Trust Fund) to fund SADA with 3.08% of receipts attributable to duties collected on articles entered, or withdrawn from warehouse, for consumption under Harmonized Tariff Schedule. Amounts not required to meet current withdrawals may be invested in U.S. Treasury obligations with interest credited to Trust Fund. Trust Fund may also borrow as repayable advances, with interest, sums necessary to carry out purposes of the fund.

Provision name:

Revenue Provisions for Agriculture Programs

 
Previous Legislation 2008 Farm Bill

Customs User Fees

 
Previous Legislation 2008 Farm Bill

Customs assesses various passenger, conveyance, and merchandise processing fees. These fees were scheduled to expire in Dec 2014.

Extends passenger and conveyance processing fees to Sept 30, 2017, and merchandise processing fees until Nov 14, 2017.

Time for Payment of Corporate Estimated Taxes

 
Previous Legislation 2008 Farm Bill

Required corporations to make quarterly estimated tax payments of their income tax liability.

Increases by 7.75 percentage points corporate estimated tax payments due in July, Aug, and Sept 2012 for corporations with assets of at least $1 billion.

Provision name:

Tax Provisions

 
Previous Legislation 2008 Farm Bill

Exclusion of Conservation Reserve Program Payments from SECA (Self-Employment Contributions Act) Tax for Certain Individuals

 
Previous Legislation 2008 Farm Bill

Under Internal Revenue Service (IRS) Notice 2006-108 issued on Dec 18, 2006, all payments received by farmers for enrolling land in Conservation Reserve Program (CRP), even those described as rental payments under the contract, were subjected to self-employment taxes regardless of whether or not taxpayer was actively farming.

Provides that CRP payments received by retired or disabled individuals are to be treated as rental payments for tax purposes and therefore excluded from self-employment taxes.

2-Year Extension of Special Rule Encouraging Contributions of Capital Gain Real Property for Conservation Purposes

 
Previous Legislation 2008 Farm Bill

Enhanced deduction allowed taxpayers to deduct up to 50% of their adjusted gross income (AGI) and farmers to deduct up to 100% of their AGI for contributions of conservation easements with any excess deduction carried forward for up to 15 years. Provision expired at end of 2007.

Extends enhanced deduction for contributions of conservation easements through Dec 31, 2009.

Deduction for Endangered Species Recovery Expenditures

 
Previous Legislation 2008 Farm Bill

No similar provision.

Allows expenditures to implement site-specific management measures in recovery plans under Endangered Species Act to be currently deducted subject to limitation that deduction may not exceed 25% of farmer's gross farm income for year.

Temporary Reduction in Rate of Tax on Qualified Timber Gain of Corporations

 
Previous Legislation 2008 Farm Bill

Sale of timber by C corporation (considered separate entity by IRS and subject to Federal income tax at the corporate level) was taxed at same rates as ordinary income, up to maximum rate of 35%.

Provides for maximum tax rate of 15% on qualified timber gain by C corporation.

Qualified timber gain is net gain on trees held more than 15 years.

Timber REIT (Real Estate Investment Trust) Modernization

 
Previous Legislation 2008 Farm Bill

Deemed gain on cutting or sale of timber held for at least 1 year eligible for capital gains treatment and not considered ordinary business income.

Considers gains from sale of timber as qualifying real property income even if held for less than 1 year.

Defines timber REIT as REIT in which more than 50% of value of its assets consists of real property held in connection with trade or business of producing timber.

Mineral Royalty Income Qualifying Income for Timber REITs

 
Previous Legislation 2008 Farm Bill

REIT was generally restricted to earning certain types of passive income, and at least 75% of income must consist of real estate-related income, including rents and other income from sale or exchange of real property. Interests in real property specifically exclude mineral, oil, or gas royalty interests. Failure to satisfy REIT income test will subject REIT to taxation as a C corporation.

Provides that mineral royalty income from real property owned by a timber REIT and held or once held for production of timber by such REIT is considered qualifying real estate income for purposes of REIT income tests.

Modification of Taxable REIT Subsidiary Asset Test for Timber REITs

 
Previous Legislation 2008 Farm Bill

REIT was generally not permitted to hold securities representing more than 10% of voting power or value of any 1 issuer, and these securities cannot represent more than 5% of value of REIT assets. However, REIT may hold any amount of securities of 1 or more "taxable REIT subsidiaries" (TRS) as long as TRS securities did not represent more than 20% of REIT assets.

In case of timber REIT, increases allowable amount of TRS securities from 20 to 25%.

Safe Harbor for Timber Property

 
Previous Legislation 2008 Farm Bill

REIT was subject to 100% excise tax on gain from sale of property that was stock in trade, inventory, or property held for sale to customers in ordinary course of business. However, no excise tax was imposed if property had been held for 4-year period and other safe harbor requirements were met.

Reduces required holding period from 4 to 2 years for sales to qualifying organization exclusively for conservation purposes.

Qualified Forestry Conservation Bonds

 
Previous Legislation 2008 Farm Bill

No similar provision.

Establishes national program that provides for issuance of up to $500 million in tax-credit timber conservation bonds for acquisition of forest and forest lands subject to conservation restrictions. These bonds could be issued by States or any political subdivision thereof and 501(c)(3) organizations. Holders of these bonds are eligible for credits against their income tax.

Energy Provisions

 
Previous Legislation 2008 Farm Bill

Credit for Production of Cellulosic Biofuel

 
Previous Legislation 2008 Farm Bill

No similar provision.

Provides temporary cellulosic biofuels production tax credit of up to $1.01/gallon through Dec 31, 2012.

Comprehensive Study of Biofuels

 
Previous Legislation 2008 Farm Bill

No similar provision.

Requires study to be conducted by National Academy of Sciences concerning future production of biofuels and domestic effects of increased production.

Modification of Alcohol Credit

 
Previous Legislation 2008 Farm Bill

Provided income and excise tax credit of 51 cents/gallon of ethanol mixed with gasoline to blending firms.

Reduces tax credits to 45 cents/gallon in calendar year after annual production or importation of ethanol reaches 7.5 billion gallons.

Calculation of Volume of Alcohol for Fuel Credits

 
Previous Legislation 2008 Farm Bill

In determining volume of alcohol for purposes of the credit for alcohol used as fuel or in qualified mixture, volume included any denaturant as long as denaturant did not exceed 5% of volume of such alcohol.

Reduces amount of allowable denaturants to 2% of volume of alcohol.

Ethanol Duty Extension

 
Previous Legislation 2008 Farm Bill

Imposed tariff on imported ethanol through Dec 31, 2008.

Extends additional duty on ethanol imported for fuel use for 2 years through Dec 31, 2010.

Limitations on Duty Drawback on Certain Imported Ethanol

 
Previous Legislation 2008 Farm Bill

U.S. businesses were eligible for rebate of duties, fees, or taxes paid on imported goods when the business subsequently exported a "commercially interchangeable" good. Rebate was made available for exported jet fuel on basis of ethanol imports, even though imported ethanol was not blended with exported jet fuel.

Phases out rebates available for imported ethanol after Oct 1, 2008.

Agricultural Provisions

 
Previous Legislation 2008 Farm Bill

Increase in Loan Limits on Agricultural Bonds

 
Previous Legislation 2008 Farm Bill

Tax-exempt agricultural bonds (Aggie Bonds) issued by State and local governments provided low-interest loans of up to $250,000 to first-time farmers and ranchers. First-time farmer was individual that did not have direct ownership interest in land that was larger than 30% of median size of farm in county in which parcel was located or that had value greater than $125,000.

Increases loan limit from $250,000 to $450,000 and indexes it for inflation. Modifies definition of first-time farmer by dropping $125,000 limitation on value of land in which individual had prior ownership interest.

Allowance of Section 1031 Treatment for Exchanges Involving Certain Mutual Ditch, Reservoir, or Irrigation Company Stock

 
Previous Legislation 2008 Farm Bill

IRS Code Section 1031, like-kind exchange treatment, generally did not apply to exchange of stock.

Treats exchange of mutual ditch, reservoir, or irrigation company stock as exchange of real property and, therefore, it will qualify for Section 1031 treatment.

Agricultural Chemicals Security Credit

 
Previous Legislation 2008 Farm Bill

No similar provision.

Allows that retailers of agricultural products and chemicals and manufacturers, formulators, or distributors of certain pesticides be eligible for tax credit of 30% of costs for protection of such chemicals or pesticides.

3-Year Depreciation for Race Horses That Are 2-Years Old or Younger

 
Previous Legislation 2008 Farm Bill

Required cost of race horses 2-years old or younger when placed in service to be depreciated over 7-year period.

Allows all race horses, regardless of age when placed in service, to be depreciated over 3-year period.

Temporary Tax Relief for Kiowa County, KS, and Surrounding Area

 
Previous Legislation 2008 Farm Bill

No similar provision.

Provides variety of tax relief measures to victims of tornados and storms that hit Greensburg, KS, area on May 4, 2007.

Competitive Certification Awards Modification Authority

 
Previous Legislation 2008 Farm Bill

No similar provision.

Provides authority to Secretary of Treasury to modify terms of qualifying competitive certification award and associated closing agreement with regard to advance coal and gasification project credit.

Other Revenue Provisions

 
Previous Legislation 2008 Farm Bill

Limitation on Excess Farm Losses of Certain Taxpayers

 
Previous Legislation 2008 Farm Bill

No limit on amount of farm losses that farmers who actively participated in farming operation could use to reduce nonfarm income.

Limits amount of farm losses that an individual can use to offset nonfarm income to greater of $300,000 or net farm income individual has reported over last 5 years. Limitation only applies to those farmers receiving direct, counter-cyclical, or Commodity Credit Corporation (CCC) loans. Losses that are limited can be carried forward to subsequent years. For purposes of this limitation, farming is defined to include processing of agricultural commodities.

Modification of Optional Method of Computing Net Earnings for Self-Employment

 
Previous Legislation 2008 Farm Bill

Allowed farmer with little or no net farm income to elect an optional method of computing net earnings for self-employment tax purposes. However, payment levels under this optional method were not updated and no longer permit farmer to earn 4 quarters of coverage per year.

Modifies farm optional method for computing earnings for self-employment tax purposes to allow a farmer to obtain 4 credits of Social Security benefit coverage per year.

Information Reporting for CCC Transactions

 
Previous Legislation 2008 Farm Bill

For market assistance loans repaid by farmer after Jan 1, 2007, IRS Notice 2007-63 provided that CCC must issue Form 1099-G and report market gain associated with repayment whether farmer repaid loan with cash or CCC certificates.

For loans repaid on or after Jan 1, 2007, codifies requirement that CCC issue Form 1099-G regardless of method taxpayer uses to repay loan.

Protection of Social Security

 
Previous Legislation 2008 Farm Bill

No similar provision.

To prevent Social Security Trust Fund from being reduced as result of this Act, requires Secretary of Treasury to transfer funds from general revenues for fiscal years 2009-17.

Provision name:

Caribbean Basin Trade Partnership Act 

Previous Legislation 2008 Farm Bill

Provided trade preferences for textile and apparel from Caribbean Basin countries.

Provisions extended through Sept 30, 2010.

Provision name:

Haitian Hemispheric Opportunity Through Partnership Encouragement Act of 2008 (HOPE II)

 
Previous Legislation 2008 Farm Bill

Provided preferential treatment to apparel imports from Haiti.

Simplifies rules for Haitian apparel to qualify for duty-free treatment. Authorizes apparel sector labor capacity building and monitoring program. Extends apparel benefits through Sept 30, 2018.

Provision name:

Unused Merchandise Drawback

 
Previous Legislation 2008 Farm Bill

Unused merchandise drawback of tariff paid was available when imported wine was exported or destroyed within 3 years of import without being used in U.S.

Domestic or other wine commercially interchangeable with the imported wine may have been substituted for the imported wine.

A drawback, equal to 99% of duty paid upon importing, was granted on substituted domestic wine that:

  • was exported or destroyed
  • imported wine that was reexported or
  • combination of any of these, as long as exported wine was not used in U.S.

To determine commercially interchangeable, U.S. Customs and Border Protection evaluated critical properties of the wine, including:

  • government and industrial standards
  • part numbers
  • tariff classification
  • value

Tightens definition of "commercially interchangeable," requiring domestic wine that will be exported to receive the duty drawback to be of same color as imported wine and have price variability of no greater than 50% of value of the imported wine.

For more information, contact: Ron Durst or Edwin Young

Web administration: webadmin@ers.usda.gov

Updated date: October 6, 2008