Perhaps There is Only An Extension of Tax on Gain of Farmland

Our previous post regarding tax-free income might now only be an installment of tax

Photo by Brandon Green on Unsplash

In our previous post we discussed The Protecting American Farmland Act introduced by Senator McConnell (R-KY) being part of the One Big Beautiful Bill. However, in the text released on Saturday, the only part of the text we could find on this Act was Section 70437 of the One Big Beautiful Bill that would allow qualifying farmers an election to pay their income tax related to the gain on selling farmland in four equal installments instead of owing the tax all at once.

They would owe one-fourth of the tax by the original due date of the tax return (without any extensions), with the three remaining installments coming due on that same date each year.

However, there is one big catch to this option for the selling farmer. There must be a covenant or other legally enforceable restriction which prohibits the use of such property other than as a farm for farming purposes for at least 10 years after the date of sale and it appears that this has to be in place before the sale occurs.