first-time farmer

(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 2016” in subparagraph (A)(ii) 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.

Source

26 USC § 147(c)(2)


Scoping language

For purposes of this paragraph
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