(c) Limitation on use for land acquisition
(1) In general
Except as provided in subsection (h), a private activity bond shall not be a qualified bond if—
(A) it is issued as part of an issue and 25 percent or more of the net proceeds of such issue are to be used (directly or indirectly) for the acquisition of land (or an interest therein), or
(B) any portion of the proceeds of such issue is to be used (directly or indirectly) for the acquisition of land (or an interest therein) to be used for farming purposes.
(2) Exception for first-time farmers
(A) In general
If the requirements of subparagraph (B) are met with respect to any land, paragraph (1) shall not apply to such land, and subsection (d) shall not apply to property to be used thereon for farming purposes, but only to the extent of expenditures (financed with the proceeds of the issue) not in excess of $450,000.
(B) Acquisition by first-time farmers
The requirements of this subparagraph are met with respect to any land if—
(i) such land is to be used for farming purposes, and
(ii) such land is to be acquired by an individual who is a first-time farmer, who will be the principal user of such land, and who will materially and substantially participate on the farm of which such land is a part in the operation of such farm.
(C) First-time farmer
For purposes of this paragraph—
(i) In general
The term “first-time farmer” means any individual if such individual—
(I) has not at any time had any direct or indirect ownership interest in substantial farmland in the operation of which such individual materially participated, and
(II) has not received financing under this paragraph in an amount which, when added to the financing to be provided under this paragraph, exceeds the amount in effect under subparagraph (A).
(ii) Aggregation rules
Any ownership or material participation, or financing received, by an individual’s spouse or minor child shall be treated as ownership and material participation, or financing received, by the individual.
(iii) Insolvent farmer
For purposes of clause (i), farmland which was previously owned by the individual and was disposed of while such individual was insolvent shall be disregarded if section 108 applied to indebtedness with respect to such farmland.
(D) Farm
For purposes of this paragraph, the term “farm” has the meaning given such term by section 6420(c)(2).
(E) Substantial farmland
For purposes of this paragraph, the term “substantial farmland” means any parcel of land unless such parcel is smaller than 30 percent of the median size of a farm in the county in which such parcel is located.
(F) Used equipment limitation
For purposes of this paragraph, in no event may the amount of financing provided by reason of this paragraph to a first-time farmer for personal property—
(i) of a character subject to the allowance for depreciation,
(ii) the original use of which does not begin with such farmer, and
(iii) which is to be used for farming purposes,
exceed $62,500. A rule similar to the rule of subparagraph (C)(ii) shall apply for purposes of the preceding sentence.
(G) Acquisition from related person
For purposes of this paragraph and section 144(a), the acquisition by a first-time farmer of land or personal property from a related person (within the meaning of section 144(a)(3)) shall not be treated as an acquisition from a related person, if—
(i) the acquisition price is for the fair market value of such land or property, and
(ii) subsequent to such acquisition, the related person does not have a financial interest in the farming operation with respect to which the bond proceeds are to be used.
(H) Adjustments for inflation
In the case of any calendar year after 2008, the dollar amount in subparagraph (A) shall be increased by an amount equal to—
(i) such dollar amount, multiplied by
(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting “calendar year 2007” for “calendar year 1992” in subparagraph (B) thereof.
If any amount as increased under the preceding sentence is not a multiple of $100, such amount shall be rounded to the nearest multiple of $100.
(3) Exception for certain land acquired for environmental purposes, etc.
Any land acquired by a governmental unit (or issuing authority) in connection with an airport, mass commuting facility, high-speed intercity rail facility, dock, or wharf shall not be taken into account under paragraph (1) if—
(A) such land is acquired for noise abatement or wetland preservation, or for future use as an airport, mass commuting facility, high-speed intercity rail facility, dock, or wharf, and
(B) there is not other significant use of such land.
Inflation Adjusted Items for Certain Years
For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under section 1 of this title.
References in Text
The date of the enactment of the Tax Reform Act of 1986, referred to in subsec. (b)(5), is the date of enactment of Pub. L. 99–514, which was approved Oct. 22, 1986.
Codification
Pub. L. 110–234 and Pub. L. 110–246 made identical amendments to this section. The amendments by Pub. L. 110–234 were repealed by section 4(a) of Pub. L. 110–246.
Amendments
2012—Subsec. (e). Pub. L. 112–95 inserted at end: “The preceding sentence shall not apply to any fixed-wing aircraft equipped for, and exclusively dedicated to providing, acute care emergency medical services (within the meaning of section 4261(g)(2)).”
2008—Subsec. (c)(2)(A). Pub. L. 110–246, § 15341(a), substituted “$450,000” for “$250,000”.
Subsec. (c)(2)(C)(i)(II). Pub. L. 110–246, § 15341(d), substituted “the amount in effect under subparagraph (A)” for “$250,000”.
Subsec. (c)(2)(E). Pub. L. 110–246, § 15341(c), substituted “unless such parcel is smaller than 30 percent of the median size of a farm in the county in which such parcel is located.” for “unless—
“(i) such parcel is smaller than 30 percent of the median size of a farm in the county in which such parcel is located, and
“(ii) the fair market value of the land does not at any time while held by the individual exceed $125,000.”
Subsec. (c)(2)(H). Pub. L. 110–246, § 15341(b), added subpar. (H).
2001—Subsec. (h). Pub. L. 107–16, § 422(e), substituted “certain bonds” for “mortgage revenue bonds, qualified student loan bonds, and qualified 501(c)(3) bonds” in heading.
Subsec. (h)(3). Pub. L. 107–16, § 422(d), added par. (3).
1996—Subsec. (c)(2)(E)(i). Pub. L. 104–188, § 1117(b), substituted “30 percent” for “15 percent”.
Subsec. (c)(2)(G). Pub. L. 104–188, § 1117(a), added subpar. (G).
1990—Subsec. (d)(3)(B). Pub. L. 101–508 substituted “section 47(c)(2)(B)” for “section 48(g)(2)(B)”.
1989—Subsec. (c)(3). Pub. L. 101–239 inserted a comma after “mass commuting facility” in introductory provisions and in subpar. (A).
1988—Subsec. (c)(3). Pub. L. 100–647, § 6180(b)(4), inserted “high-speed intercity rail facility” after “mass commuting facility” in introductory text and in subpar. (A).
Subsec. (e). Pub. L. 100–647, § 1013(a)(11), struck out “treated as” after “shall not be”.
Subsec. (f)(2)(D). Pub. L. 100–647, § 1013(a)(29), substituted “the average maturity date of the issue of which the refunding bond is a part is later than the average maturity date of the bonds to be refunded by such issue. For purposes of the preceding sentence, average maturity shall be determined in accordance with subsection (b)(2)(A)” for “the maturity date of such bond is later than the maturity date of the bond to be refunded”.
Subsec. (f)(2)(E)(i). Pub. L. 100–647, § 1013(a)(36), inserted sentence at end relating to treatment of an individual appointed to fill a vacancy in the office of an elected official.
Subsec. (f)(3). Pub. L. 100–647, § 6180(b)(5), inserted “or high-speed intercity rail facilities” after “airports” in heading and after “airport” in subpars. (A) and (B) and in last sentence.
Subsec. (f)(4). Pub. L. 100–647, § 1013(a)(12), added par. (4).
Subsec. (g)(1). Pub. L. 100–647, § 1013(a)(13)(A), substituted “proceeds” for “aggregate face amount”.
Subsec. (g)(2). Pub. L. 100–647, § 1013(a)(13)(B), substituted “proceeds” for “aggregate authorized face amount” and “do” for “does”.
Effective Date of 2012 Amendment
Pub. L. 112–95, title XI, § 1105(b), Feb. 14, 2012, 126 Stat. 152, provided that:
“The amendment made by this section [amending this section] shall apply to obligations issued after the date of the enactment of this Act [Feb. 14, 2012].”
Effective Date of 2008 Amendment
Amendment of this section and repeal of Pub. L. 110–234 by Pub. L. 110–246 effective May 22, 2008, the date of enactment of Pub. L. 110–234, except as otherwise provided, see section 4 of Pub. L. 110–246, set out as an Effective Date note under section 8701 of Title 7, Agriculture.
Pub. L. 110–234, title XV, § 15341(e), May 22, 2008, 122 Stat. 1517, and Pub. L. 110–246, § 4(a), title XV, § 15341(e), June 18, 2008, 122 Stat. 1664, 2279, provided that:
“The amendments made by this section [amending this section] shall apply to bonds issued after the date of the enactment of this Act [June 18, 2008].”
[Pub. L. 110–234 and Pub. L. 110–246 enacted identical provisions. Pub. L. 110–234 was repealed by section 4(a) of Pub. L. 110–246, set out as a note under section 8701 of Title 7, Agriculture.]
Effective Date of 2001 Amendment
Amendment by Pub. L. 107–16 applicable to bonds issued after Dec. 31, 2001, see section 422(f) of Pub. L. 107–16, set out as a note under section 142 of this title.
Effective Date of 1996 Amendment
Pub. L. 104–188, title I, § 1117(c), Aug. 20, 1996, 110 Stat. 1764, provided that:
“The amendments made by this section [amending this section] shall apply to bonds issued after the date of the enactment of this Act [Aug. 20, 1996].”
Effective Date of 1990 Amendment
Amendment by Pub. L. 101–508 applicable to property placed in service after Dec. 31, 1990, but not applicable to any transition property (as defined in section 49(e) of this title), any property with respect to which qualified progress expenditures were previously taken into account under section 46(d) of this title, and any property described in section 46(b)(2)(C) of this title, as such sections were in effect on Nov. 4, 1990, see section 11813(c) of Pub. L. 101–508, set out as a note under section 45K of this title.
Effective Date of 1989 Amendment
Amendment by Pub. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100–647, to which such amendment relates, see section 7817 of Pub. L. 101–239, set out as a note under section 1 of this title.
Effective Date of 1988 Amendment
Pub. L. 100–647, title I, § 1013(a)(13)(C), Nov. 10, 1988, 102 Stat. 3539, provided that:
“The amendments made by this paragraph [amending this section] shall apply to bonds issued after June 30, 1987.”
Amendment by section 1013(a)(11), (12), (29), (36) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
Amendment by section 6180(b)(4), (5) of Pub. L. 100–647 applicable to bonds issued after Nov. 10, 1988, see section 6180(c) of Pub. L. 100–647, set out as a note under section 142 of this title.
Effective Date
Subsec. (f) applicable to bonds issued after Dec. 31, 1986, see section 1311(d) of Pub. L. 99–514, as amended, set out as an Effective Date; Transitional Rules note under section 141 of this title.
Savings Provision
For provisions that nothing in amendment by Pub. L. 101–508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liability for tax for periods ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101–508, set out as a note under section 45K of this title.