Some land sellers would exclude profits from federal taxable income

Eligible sellers would exclude profits from covered property-rights sales from federal taxable income. Covered sales include full ownership, a right to ownership later, and permanent restrictions on land use. The buyer must meet the law’s definition of a qualified organization, and the sale must be authorized under the Defense Department’s REPI program. Sellers may keep qualifying mineral rights only if access does not use surface mining. Businesses whose income passes through to their owners face the separate three-year purchase restriction. The exclusion would apply to tax years beginning after the bill becomes law.

Businesses whose income passes through to their owners would face a three-year restriction on the exclusion. The restriction covers businesses that bought the property rights within three years before the covered sale. The restriction would not apply to partnerships held almost entirely, directly or indirectly, by one person and their family as defined in the bill. The same exception would apply to S corporations and other such businesses unless the Treasury Secretary provides otherwise. The restriction would apply to tax years beginning after the bill becomes law.