DEDUCTIONS FOR SALE OF LAND TO A BEGINNING FARMER

42.15.223 DEDUCTIONS FOR SALE OF LAND TO A BEGINNING FARMER

(1) A deduction from federal taxable income is allowed for each sale of 80 acres or more if approved by the agricultural loan authority. The deduction is the amount which would have to be included in federal taxable income as ordinary income and the taxable portion of capital gains resulting from the sale, up to a maximum deduction of $50,000. The deduction will be taken each year a payment is received until the loan is repaid or the deductions for all years equal $50,000.

(2) The taxpayer may claim more than one deduction as a result of sales to beginning farmers provided each sale is approved by the agricultural loan authority.

(3) To the extent that a net operating loss is created as a result of this deduction, such loss shall not be available for carryover or carryback provisions.

(4) Individuals in a partnership that makes an approved sale are also allowed this deduction. The partners' distributive shares of profit may be reduced by the amount of the allowable deductions. However, in no case shall the total deduction for all partners exceed $50,000 for each sale. Shareholders of an electing small business corporation are not allowed a deduction on their individual tax returns for approved sales made by the corporation. The deduction must be taken by the corporation.

(5) For tax deduction purposes, a copy of the approval of the transaction by the agricultural loan authority must be attached to the return claiming the deduction. The department may also require additional documentation on request to establish the eligibility of the transaction for a tax deduction. Authorizing statute(s): 15-1-201 , MCA Implementing statute(s): 80-12-211 , MCA History: NEW, 1984 MAR p. 391, Eff. 3/1/84; TRANS and AMD, 2025 MAR, 42-1088, Eff. 1/25/25.