Title 26Internal Revenue CodeRelease 119-73

§1252 Gain from disposition of farm land

Title 26 › Subtitle Subtitle A— - Income Taxes › Chapter CHAPTER 1— - NORMAL TAXES AND SURTAXES › Subchapter Subchapter P— - Capital Gains and Losses › Part PART IV— - SPECIAL RULES FOR DETERMINING CAPITAL GAINS AND LOSSES › § 1252

Last updated Apr 6, 2026|Official source

Summary

If someone disposes of farmland they owned for less than 10 years and had claimed soil-and-water conservation deductions for it, they may have to treat part of those past deductions as income. Farm land here means land for which deductions were claimed under section 175. The amount to include is the smaller of two things: a percentage of the total section 175 deductions for that land, or the gain on the land (for a sale, exchange, or involuntary conversion use the amount received; for other disposals use the land’s fair market value) minus the land’s adjusted basis. The percentage depends on how long the land was held: within 5 years 100%; in year 6 80%; year 7 60%; year 8 40%; year 9 20%; 10 years or more 0%. The Secretary will issue rules like those in section 1245 to carry this out.

Full Legal Text

Title 26, §1252

Internal Revenue Code — Source: USLM XML via OLRC

(a)(1)Except as otherwise provided in this section, if farm land which the taxpayer has held for less than 10 years is disposed of, the lower of—
(A)the applicable percentage of the aggregate of the deductions allowed under section 175 (relating to soil and water conservation expenditures) for expenditures made by the taxpayer with respect to the farm land or
(B)the excess of—
(i)the amount realized (in the case of a sale, exchange, or involuntary conversion), or the fair market value of the farm land (in the case of any other disposition), over
(ii)the adjusted basis of such land,
(2)For purposes of this section, the term “farm land” means any land with respect to which deductions have been allowed under section 175 (relating to soil and water conservation expenditures).
(3)For purposes of this section
If the farm land is disposed of—The applicablepercentage is— Within 5 years after the date it was acquired100 percent. Within the sixth year after it was acquired80 percent. Within the seventh year after it was acquired60 percent. Within the eighth year after it was acquired40 percent. Within the ninth year after it was acquired20 percent. 10 years or more years after it was acquired0 percent.
(b)Under regulations prescribed by the Secretary, rules similar to the rules of section 1245 shall be applied for purposes of this section.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

2018—Subsec. (a)(1). Pub. L. 115–141, § 401(b)(32)(A), struck out “during a taxable year beginning” after “disposed of” in introductory provisions. Subsec. (a)(1)(A). Pub. L. 115–141, § 401(b)(32)(B), substituted “section” for “sections” and “for expenditures” for “and 182 (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) for expenditures”. Subsec. (a)(2). Pub. L. 115–141, § 401(b)(32)(C), substituted “section” for “sections” and struck out “or 182 (relating to expenditures by farmers for clearing land)” before period at end. 2014—Subsec. (a)(1). Pub. L. 113–295, § 221(a)(85)(A), struck out “after
December 31, 1969” after “beginning” in introductory provisions. Subsec. (a)(1)(A). Pub. L. 113–295, § 221(a)(85)(B), struck out “after
December 31, 1969,” after “taxpayer”. 1986—Subsec. (a)(1)(A). Pub. L. 99–514 substituted “(as in effect on the day before the date of the enactment of the Tax Reform Act of 1986)” for “(relating to expenditures by farmers for clearing land)”. 1984—Subsec. (a)(1). Pub. L. 98–369 struck out “, except that this section shall not apply to the extent section 1251 applies to such gain” after “of this subtitle” in last sentence. 1976—Subsec. (a)(1). Pub. L. 94–455, § 1901(b)(3)(K), substituted “ordinary income” for “gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231”. Subsec. (b). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

Statutory Notes and Related Subsidiaries

Effective Date

of 2014 AmendmentAmendment by Pub. L. 113–295 effective Dec. 19, 2014, subject to a

Savings Provision

, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title.

Effective Date

of 1986 AmendmentAmendment by Pub. L. 99–514 applicable to amounts paid or incurred after Dec. 31, 1985, in taxable years ending after such date, see section 402(c) of Pub. L. 99–514, set out as an

Effective Date

of Repeal note under former section 182 of this title.

Effective Date

of 1984 AmendmentAmendment by Pub. L. 98–369 applicable to taxable years beginning after Dec. 31, 1983, see section 492(d) of Pub. L. 98–369, set out as a note under section 170 of this title.

Effective Date

of 1976 AmendmentAmendment by section 1901(b)(3)(K) of Pub. L. 94–455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title.

Effective Date

Pub. L. 91–172, title II, § 214(c), Dec. 30, 1969, 83 Stat. 573, provided that: “The

Amendments

made by this section [enacting this section] shall apply to taxable years beginning after December 31, 1969.”

Savings Provision

For provisions that nothing in amendment by Pub. L. 115–141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Mar. 23, 2018, for purposes of determining liability for tax for periods ending after Mar. 23, 2018, see section 401(e) of Pub. L. 115–141, set out as a note under section 23 of this title.

Reference

Citations & Metadata

Citation

26 U.S.C. § 1252

Title 26Internal Revenue Code

Last Updated

Apr 6, 2026

Release point: 119-73