26 U.S.C. § 1257 | Disposition of converted wetlands or highly erodible croplands

(a)

Gain treated as ordinary income

Any gain on the disposition of converted wetland or highly erodible cropland shall be treated as ordinary income. Such gain shall be recognized notwithstanding any other provision of this subtitle, except that this section shall not apply to the extent such gain is recognized as ordinary income under any other provision of this part.

(b)

Loss treated as long-term capital loss

Any loss recognized on the disposition of converted wetland or highly erodible cropland shall be treated as a long-term capital loss.

(c)

Definitions

For purposes of this section—

(1)

Converted wetland

16 U.S.C. 3801(7)The term “converted wetland” means any converted wetland (as defined in section 1201(a)(7) of the Food Security Act of 1985 ()) held—

(A)

by the person whose activities resulted in such land being converted wetland, or

(B)

by any other person who at any time used such land for farming purposes.

(2)

Highly erodible cropland

16 U.S.C. 3801(10)The term “highly erodible cropland” means any highly erodible cropland (as defined in section 1201(a)(10) of the Food Security Act of 1985 ()), if at any time the taxpayer used such land for farming purposes (other than the grazing of animals).

(3)

Treatment of successors

If any land is converted wetland or highly erodible cropland in the hands of any person, such land shall be treated as converted wetland or highly erodible cropland in the hands of any other person whose adjusted basis in such land is determined (in whole or in part) by reference to the adjusted basis of such land in the hands of such person.

(d)

Special rules

Under regulations prescribed by the Secretary, rules similar to the rules applicable under section 1245 shall apply for purposes of subsection (a). For purposes of sections 170(e) and 751(c), amounts treated as ordinary income under subsection (a) shall be treated in the same manner as amounts treated as ordinary income under section 1245.

Pub. L. 99–514, title IV, § 403(a)Oct. 22, 1986100 Stat. 2222 Pub. L. 108–27, title III, § 302(e)(4)(B)(ii)May 28, 2003117 Stat. 764 Pub. L. 115–141, div. U, title IV, § 401(a)(177)Mar. 23, 2018132 Stat. 1192(Added , , ; amended , , ; , (178), , .)

Editorial Notes

Amendments

Pub. L. 115–141, § 401(a)(177)16 U.S.C. 3801(7)16 U.S.C. 3801(4)2018—Subsec. (c)(1). , substituted “section 1201(a)(7)” for “section 1201(4)” and “” for “” in introductory provisions.

Pub. L. 115–141, § 401(a)(178)16 U.S.C. 3801(10)16 U.S.C. 3801(6)Subsec. (c)(2). , substituted “section 1201(a)(10)” for “section 1201(6)” and “” for “”.

Pub. L. 108–272003—Subsec. (d). struck out “, 341(e)(12),” after “170(e)”.

Statutory Notes and Related Subsidiaries

Effective Date of 2003 Amendment

Pub. L. 108–27Dec. 31, 2002section 302(f) of Pub. L. 108–27 section 1 of this titleAmendment by applicable, except as otherwise provided, to taxable years beginning after , see , set out as an Effective and Termination Dates of 2003 Amendment note under .

Effective Date

Pub. L. 99–514, title IV, § 403(c)Oct. 22, 1986100 Stat. 2222

March 1, 1986“The amendments made by this section [enacting this section] shall apply to dispositions of converted wetland or highly erodible cropland (as defined in section 1257(c) of the Internal Revenue Code of 1986 as added by this section) first used for farming after , in taxable years ending after that date.”

, , , provided that: