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TITLE 26-INTERNAL REVENUE CODE (B) to any amount incurred on account of fire, storm, flood, or other casualty or on account of disease or drought. (3) Preproductive period defined For purposes of this subsection, the term "preproductive period" means- (A) in the case of property having a useful life of more than 1 year which will have more than 1 crop or yield, the period before the disposition of the first such marketable crop or yield, or (B) in the case of any other property, the period before such property is disposed of. For purposes of this section, the use by the taxpayer In the trade or business of farming of any supply produced in such trade or busi- ness shall be treated as a disposition. (c) Exception for small business and family corpora. tions For purposes of subsection (a), a corporation shall be treated as not being a corporation if it is- (1) an electing small business corporation (within the meaning of section 1371(b)), (2) a corporation of which at least 50 per- cent of the total combined voting power of all classes of stock entitled to vote, and at least 50 percent of the total number of shares of all other classes of stock of the corporation, are owned by members of the same family, or (3) a corporation the gross receipts of which meet the requirements of subsection (e). (d) Members of the same family For purposes of subsection (c)(2)- (1) the members of the same family are an individual, such individual's brothers and sis- ters, the brothers and sisters of such individ- ual's parents and grandparents, the ancestors and lineal descendants or any of the forego- Ing, a spouse of any of the foregoing, and the estate of any of the foregoing, (2) stock owned, directly or indirectly, by or for a partnership or trust shall be treated as owned proportionately by its partners or beneficiaries, and (3) if 50 percent or more in value of the stock in a corporation (hereinafter in this paragraph referred to as "first corporation") is owned, directly or through paragraph (2), by or for members of the same family, such members shall be considered as owning each class of stock in a second corporation (or a wholly owned subsidiary of such second cor- poration) owned, directly or indirectly, by or for the first corporation, in that proportion which the value of the stock in the first cor- poration which such members so own bears to the value of all the stock in the first corpora- tion. For purposes of paragraph (1), individuals re- lated by the half blood or by legal adoption shall be treated as if they were related by the whole blood. (e) Corporations having gross receipts of $1,000,000 or less A corporation meets the requirements of this subsection if, for each prior taxable year begin- ning after December 31, 1975, such corporation (and any predecessor corporation) did not have gross receipts exceeding $1,000,000. For pur- poses of the preceding sentence, all corpora- tions which are members of a controlled group of corporations (within the meaning of section 1563(a)) shall be treated as one corporation. (f) Coordination with section 481 In the case of any taxpayer required by this section to change its method of accounting for any taxable year- (1) such change shall be treated as having been made with the consent of the Secretary, (2) for purposes of section 481(a)(2), such change shall be treated as a change not initi- ated by the taxpayer, and (3) under regulations prescribed by the Sec- retary, the net amount of adjustments re- quired by section 481(a) to be taken into ac- count by the taxpayer in computing taxable income shall (except as otherwise provided in such regulations) be taken into account in each of the 10 taxable years beginning with the year of change. (g) Certain annual accrual accounting methods (1) In general if- (A) for its 10 taxable years ending with its first taxable year beginning after December 31, 1975, a corporation used an annual ac- crual method of accounting with respect to its trade or business of farming, (B) such corporation raises crops which are harvested not less than 12 months after planting, and (C) such corporation has used such method of accounting for all taxable years intervening between its first taxable year beginning after December 31, 1975, and the taxable year, such corporation may continue to employ such method of accounting for the taxable year with respect to its trade or business of farming. (2) Annual accrual method of accounting defined For purposes of paragraph (1), the term "annual accrual method of accounting" means a method under which revenues, costs, and expenses are computed on an accrual method of accounting and the preproductive expenses incurred during the taxable year are charged to harvested crops or deducted in de- termining the taxable income for such years. (3) Certain reorganizations For purposes of this subsection, if a corpo- ration acquired substantially all the assets of a farming trade or business from another cor. poration in a transaction in which no gain or loss was recognized to the transferor or trans- feree corporation, the transferee corporation shall be deemed to have computed its taxable income on an annual accrual method of ac- counting during the period for which the transferor corporation computed its taxable income from such trade or business on an annual accrual method. (Added Pub. L. 94-455, title II, § 207(c)(1)(A), Oct. 4, 1976, 90 Stat. 1538.) EFFcT IVE DATE Section 207(c)(2) of Pub. L. 94-455 provided that: "The amendments made by paragraph (1) [adding this section and amending analysis preceding section 446 of Page 356