Statutes, codes, and regulations
United States Code
Title 26 - INTERNAL REVENUE CODESubtitle A - INCOME TAXESChapter 1 - NORMAL TAXES AND SURTAXESSubchapter Q - READJUSTMENT OF TAX BETWEEN YEARS AND SPECIAL LIMITATIONS
Part I - INCOME AVERAGING
Section 1301 - Averaging of farm income

26 U.S.C. § 1301

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Current through P.L. 118-106 (published on www.congress.gov on 10/04/2024)
Section 1301 - Averaging of farm income
(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.

26 U.S.C. § 1301

Added Pub. L. 105-34, title IX, §933(a), Aug. 5, 1997, 111 Stat. 881; amended Pub. L. 108-357, title III, §314(b), Oct. 22, 2004, 118 Stat. 1468.

EDITORIAL NOTES

PRIOR PROVISIONSA prior section 1301, added Pub. L. 88-272, title II, §232(a), Feb. 26, 1964, 78 Stat. 106; amended Pub. L. 91-172, title III, §311(a), Dec. 30, 1969, 83 Stat. 586; Pub. L. 98-369, div. A, title I, §173(b), (c)(1), July 18, 1984, 98 Stat. 704, placed a limit on the tax attributable to averagable income, prior to repeal by Pub. L. 99-514, title I, §§141(a), 151(a), Oct. 22, 1986, 100 Stat. 2117, 2121, effective Dec. 31, 1986.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), Feb. 26, 1964, 78 Stat. 106; amended Pub. L. 91-172, title III, §311(b), Dec. 30, 1969, 83 Stat. 586; Pub. L. 94-455, title VII, §701(f)(1), Oct. 4, 1976, 90 Stat. 1580; Pub. L. 95-30, title I, §102(b)(15), May 23, 1977, 91 Stat. 138; Pub. L. 95-600, title I, §101(d)(2), Nov. 6, 1978, 92 Stat. 2770; Pub. L. 95-615, §202(g)(5), formerly §202(f)(5), Nov. 8, 1978, 92 Stat. 3100, renumbered Pub. L. 96-222, title I, §108(a)(1)(A), Apr. 1, 1980, 94 Stat. 223; Pub. L. 97-34, title I, §111(b)(3), Aug. 13, 1981, 95 Stat. 194; Pub. L. 97-248, title II, §265(b)(2)(B), Sept. 3, 1982, 96 Stat. 547; Pub. L. 98-369, div. A, title I, §173(a), (c)(2)-(4), July 18, 1984, 98 Stat. 703, 704, defined "averagable income" and other terms related to income averaging, prior to repeal by Pub. L. 99-514, title I, §§141(a), 151(a), Oct. 22, 1986, 100 Stat. 2117, 2121, effective Dec. 31, 1986.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), Feb. 26, 1964, 78 Stat. 107; amended Pub. L. 91-172, title III, §311(d)(1), Dec. 30, 1969, 83 Stat. 587; Pub. L. 94-455, title XIX, §1901(b)(8)(G), Oct. 4, 1976, 90 Stat. 1795; Pub. L. 97-34, title I, §111(b)(4), Aug. 13, 1981, 95 Stat. 194; Pub. L. 99-272, title XIII, §13206(a), (b), Apr. 7, 1986, 100 Stat. 318, 319, related to individuals eligible for income averaging, prior to repeal by Pub. L. 99-514, title I, §§141(a), 151(a), Oct. 22, 1986, 100 Stat. 2117, 2121, effective Dec. 31, 1986.Another prior section 1303, acts Aug. 16, 1954, ch. 736, 68A Stat. 335, Sept. 22, 1961, Pub. L. 87-293, title II, §201(b), 75 Stat. 625, related to income from back pay, prior to the general revision of this part by Pub. L. 88-272.A prior section 1304, added Pub. L. 88-272, title II, §232(a), Feb. 26, 1964, 78 Stat. 108; amended Pub. L. 91-172, title III, §311(c), (d)(2), title V, §515(c)(4), title VIII, §§802(c)(5), 803(d)(8), Dec. 30, 1969, 83 Stat. 587, 646, 678, 684; Pub. L. 93-406, title II, §2005(c)(6), Sept. 2, 1974, 88 Stat. 991; Pub. L. 94-455, title III, §302(c), title V, §501(b)(7), title XIX, §1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1555, 1559, 1834; Pub. L. 95-600, title IV, §401(b)(5), Nov. 6, 1978, 92 Stat. 2867; Pub. L. 95-615, §202(g)(5), formerly §202(f)(5), Nov. 8, 1978, 92 Stat. 3100, renumbered Pub. L. 96-222, title I, §108(a)(1)(A), Apr. 1, 1980, 94 Stat. 223; Pub. L. 97-34, title I, §§101(c)(2)(B), 111(b)(3), (4), Aug. 13, 1981, 95 Stat. 183, 194; Pub. L. 97-248, title II, §265(b)(2)(C), Sept. 3, 1982, 96 Stat. 547, set out special rules for income averaging, prior to repeal by Pub. L. 99-514, title I, §§141(a), 151(a), Oct. 22, 1986, 100 Stat. 2117, 2121, effective Dec. 31, 1986.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), Feb. 26, 1964, 78 Stat. 110; amended Pub. L. 94-455, title XIX, §1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834, provided for promulgation of regulations for income averaging, prior to repeal by Pub. L. 99-514, title I, §§141(a), 151(a), Oct. 22, 1986, 100 Stat. 2117, 2121, effective Dec. 31, 1986.Another prior section 1305, act Aug. 26, 1957, Pub. L. 85-165, §1, 71 Stat. 413, related to damages for breach of contract or fiduciary duty, prior to the general revision of this part by Pub. L. 88-272.A prior section 1306, Pub. L. 85-866, title I, §58(a), Sept. 2, 1958, 72 Stat. 1646, related to damages received for injuries under the antitrust laws, prior to the general revision of this part by Pub. L. 88-272.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, Aug. 26, 1957, Pub. L. 85-165, §1, 71 Stat. 413; renumbered §1307, Sept. 2, 1958, Pub. L. 85-866, title I, §58(a), 72 Stat. 1646; amended Oct. 16, 1962, Pub. L. 87-834, §22(a), 76 Stat. 1064, provided rules applicable to this part, prior to the general revision of this part by Pub. L. 88-272.

AMENDMENTS2004-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).

STATUTORY NOTES AND RELATED SUBSIDIARIES

EFFECTIVE DATE OF 2004 AMENDMENT Amendment by Pub. L. 108-357 applicable to taxable years beginning after Dec. 31, 2003, see section 314(c) of Pub. L. 108-357, set out as an Effective and Termination Dates of 2004 Amendments note under section 55 of this title.

EFFECTIVE DATE Pub. L. 105-34, §933(c), Aug. 5, 1997, 111 Stat. 882, as amended by Pub. L. 105-277, div. J, title II, §2011, Oct. 21, 1998, 112 Stat. 2681-902, provided that: "The amendments made by this section [enacting this section] shall apply to taxable years beginning after December 31, 1997."

Secretary
The term "Secretary" means the Secretary of the Treasury or his delegate.
fiduciary
The term "fiduciary" means a guardian, trustee, executor, administrator, receiver, conservator, or any person acting in any fiduciary capacity for any person.
taxable year
The term "taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A. "Taxable year" means, in the case of a return made for a fractional part of a year under the provisions of subtitle A or under regulations prescribed by the Secretary, the period for which such return is made.
taxpayer
The term "taxpayer" means any person subject to any internal revenue tax.