26 U.S. Code § 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.
For purposes of this section—
(1) Converted wetland
The term “converted wetland” means any converted wetland (as defined in section 1201(4)  of the Food Security Act of 1985 (16 U.S.C. 3801 (4))) held—
(2) Highly erodible cropland
(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.
 See References in Text note below.
Source(Added Pub. L. 99–514, title IV, § 403(a),Oct. 22, 1986, 100 Stat. 2222; amended Pub. L. 108–27, title III, § 302(e)(4)(B)(ii),May 28, 2003, 117 Stat. 764.)
References in Text
Section 1201(4) of the Food Security Act of 1985 (16 U.S.C. 3801 (4)) andsection 1201(6) of the Food Security Act of 1985 (16 U.S.C. 3801 (6)), referred to in subsec. (c)(1), (2), probably are references to section 1201(a)(4) and 1201(a)(6) of that Act (16 U.S.C. 3801 (a)(4), (6)). Section 1201 of the Food Security Act of 1985 was subsequently amended, and subsecs. (a)(4) and (a)(6) ofsection 1201 no longer define the terms “converted wetland” and “highly erodible cropland”, respectively. However, such terms are defined elsewhere in that section.
2003—Subsec. (d). Pub. L. 108–27struck out “, 341(e)(12),” after “170(e)”.
Effective Date of 2003 Amendment
Amendment by Pub. L. 108–27applicable, except as otherwise provided, to taxable years beginning after Dec. 31, 2002, see section 302(f) ofPub. L. 108–27, set out as an Effective and Termination Dates of 2003 Amendment note under section 1 of this title.
Pub. L. 99–514, title IV, § 403(c),Oct. 22, 1986, 100 Stat. 2222, provided that: “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 March 1, 1986, in taxable years ending after that date.”