26 U.S.C. § 1062

Gain from the sale or exchange of qualified farmland property to qualified farmers

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(a) Election to pay tax in installments

In the case of gain from the sale or exchange of qualified farmland property to a qualified farmer, at the election of the taxpayer, the portion of the net income tax of such taxpayer for the taxable year of the sale or exchange which is equal to the applicable net tax liability shall be paid in 4 equal installments.

(b) Rules relating to installment payments(1) Date for payment of installments

If an election is made under subsection (a), the first installment shall be paid on the due date (determined without regard to any extension of time for filing the return) for the return of tax for the taxable year in which the sale or exchange occurs and each succeeding installment shall be paid on the due date (as so determined) for the return of tax for the taxable year following the taxable year with respect to which the preceding installment was made.

(2) Acceleration of payment(A) In general

If there is an addition to tax for failure to timely pay any installment required under this section, then the unpaid portion of all remaining installments shall be due on the date of such failure.

(B) Individuals

In the case of an individual, if the individual dies, then the unpaid portion of all remaining installment shall be paid on the due date for the return of tax for the taxable year in which the taxpayer dies.

In the case of a taxpayer which is a C corporation, trust, or estate, if there is a liquidation or sale of substantially all the assets of the taxpayer (including in a title 11 or similar case), a cessation of business by the taxpayer (in the case of a C corporation), or any similar circumstance, then the unpaid portion of all remaining installments shall be due on the date of such event (or in the case of a title 11 or similar case, the day before the petition is filed). The preceding sentence shall not apply to the sale of substantially all the assets of a taxpayer to a buyer if such buyer enters into an agreement with the Secretary under which such buyer is liable for the remaining installments due under this subsection in the same manner as if such buyer were the taxpayer.

(3) Proration of deficiency to installments

If an election is made under subsection (a) to pay the applicable net tax liability in installments and a deficiency has been assessed with respect to such applicable net tax liability, the deficiency shall be prorated to the installments payable under subsection (a). The part of the deficiency so prorated to any installment the date for payment of which has not arrived shall be collected at the same time as, and as a part of, such installment. The part of the deficiency so prorated to any installment the date for payment of which has arrived shall be paid upon notice and demand from the Secretary. This section shall not apply if the deficiency is due to negligence, to intentional disregard of rules and regulations, or to fraud with intent to evade tax.

Any election under subsection (a) shall be made not later than the due date for the return of tax for the taxable year described in subsection (a).

(2) Partnerships and S corporations

In the case of a sale or exchange described in subsection (a) by a partnership or S corporation, the election under subsection (a) shall be made at the partner or shareholder level. The Secretary may prescribe such regulations or other guidance as necessary to carry out the purposes of this paragraph.

(d) DefinitionsFor purposes of this section—(1) Applicable net tax liability(A) In generalThe applicable net tax liability with respect to the sale or exchange of any property described in subsection (a) is the excess (if any) of—(i) such taxpayer’s net income tax for the taxable year, over(ii) such taxpayer’s net income tax for such taxable year determined without regard to any gain recognized from the sale or exchange of such property.(B) Net income tax

The term “net income tax” means the regular tax liability reduced by the credits allowed under subparts A, B, and D of part IV of subchapter A.

(2) Qualified farmland property(A) In generalThe term “qualified farmland property” means real property located in the United States—(i) which—(I) has been used by the taxpayer as a farm for farming purposes, or(II) leased by the taxpayer to a qualified farmer for farming purposes, during substantially all of the 10-year period ending on the date of the qualified sale or exchange, and(ii) which is subject to a covenant or other legally enforceable restriction which prohibits the use of such property other than as a farm for farming purposes for any period before the date that is 10 years after the date of the sale or exchange described in subsection (a). For purposes of clause (i), property which is used or leased by a partnership or S corporation in a manner described in such clause shall be treated as used or leased in such manner by each person who holds a direct or indirect interest in such partnership or S corporation.(B) Farm; farming purposes

The terms “farm” and “farming purposes” have the respective meanings given such terms under section 2032A(e).

(3) Qualified farmer

The term “qualified farmer” means any individual who is actively engaged in farming (within the meaning of subsections (b) and (c) of section 1001 of the Food Security Act of 1986 11 See References in Text note below. (7 U.S.C. 1308–1(b) and (c))).

(e) Return requirement

A taxpayer making an election under subsection (a) shall include with the return for the taxable year of the sale or exchange described in subsection (a) a copy of the covenant or other legally enforceable restriction described in subsection (d)(2)(A)(ii).

(Added Pub. L. 119–21, title VII, § 70437(a), July 4, 2025, 139 Stat. 248.)Editorial NotesReferences in Text

Subsections (b) and (c) of section 1001 of the Food Security Act of 1986, referred to in subsec. (d)(3), probably should be a reference to subsections (b) and (c) of section 1001A of the Food Security Act of 1985, which is classified to section 1308–1(b), (c) of Title 7, Agriculture.

Prior Provisions

A prior section 1062 was renumbered section 1063 of this title.

Statutory Notes and Related SubsidiariesEffective Date

Pub. L. 119–21, title VII, § 70437(c), July 4, 2025, 139 Stat. 250, provided that: “The amendments made by this section [enacting this section and renumbering former section 1062 of this title as section 1063] shall apply to sales or exchanges in taxable years beginning after the date of the enactment of this Act [July 4, 2025].”

Notes of Decisions

Cited in 20 cases, 1927–1935 · leading case: Uncasville Mfg. Co. v. Comm'r of Internal Revenue, 55 F.2d 893 (2d Cir. 1932).

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Uncasville Mfg. Co. v. Comm'r of Internal Revenue, 55 F.2d 893 (2d Cir. 1932). · cites it 3× “Subdivision (c) of section 278 (26 USCA § 1060 note) is necessary to the assessments because they depended upon the waivers, and there was no other law regulating waivers in effect after June 2, 1924.”

United States v. Whyel, 28 F.2d 30 (3rd Cir. 1928). · cites it 2× “The difficulty arises over the construction of section 278 (e) (2) of the aet (26 USCA § 1062; Comp. St. § 6336%zz (5), (e) (2) which provides that “this section shall not * * * affect any assessment made, or distraint or proceeding in court begun, before the enactment of this…”

Pac. Coast Steel Co. v. McLaughlin, 61 F.2d 73 (9th Cir. 1932). “The terms and provisions of the 1926 Revenue Act respecting the period of limitation upon assessment and collection of taxes are different from those of the Revenue Act of 1924.”

WP Brown & Sons Lumber Co. v. Com'r of Internal Revenue, 38 F.2d 425 (6th Cir. 1930). “” 26 USCA § 1062. “Sec. 283. * * * “(e) If any deficiency in any income, war-profits, or excess-profits tax imposed by * * * the Revenue Act of 1917, * * * was assessed before June 3, 1924, but was not paid in full before the date of the enactment of.”

Huntley v. Gile, 32 F.2d 857 (9th Cir. 1929). “In short, it is conceded that, as the statutes stood at the time of the collection, the distraint proceedings were unlawful, and plaintiffs would be entitled to recover but for the provisions of sections 607 and 611 of the Revenue Act of 1928 (26 USCA §§ 2607, 2611), which…”

Dobbins v. Comm'r, 31 F.2d 935 (3rd Cir. 1929). “” The tax was barred when the Act of June 2, 1924, was passed. Section 278(d) of that act (26 USCA § 1061) provides that where assessment is made within the prescribed time, the tax may be collected within six years after the assessment, but paragraph (e) of that section (26…”

Helvering v. South Penn Oil Co., 68 F.2d 420 (D.C. Cir. 1933). “Respondent further contends that since the waiver c£ the development company involving the taxes for 1915 and the waiver of the drilling company involving the taxes for 1917 were executed after the passage of the Revenue Act of 1924, tho time of assessment of taxes under section…”

Riverside & Dan River Cotton Mills, Inc. v. United States, 11 F. Supp. 134 (Ct. Cl. 1935). · cites it 2× “* * * ” The plaintiff contends that this waiver was ineffective because (1) it was not approved by the Commissioner in writing, (2) because it contained conditions which the Commissioner had no legal authority to accept, (3) because it was secured by duress, and (4) because it…”

Roy & Titcomb, Inc. v. United States, 39 F.2d 753 (Ct. Cl. 1930). “Lamborn extending the time for assessment and collection expired on June 16,1925, and the Commissioner’s determination was not' made until October 19, 1925.”

Staten Island Hygeia Ice & Cold Storage Co. v. United States, 9 F. Supp. 746 (E.D.N.Y 1934). “” The Revenue Act of 1924, § 278 (e), 26 USCA § 1062 note, provides as follows: “(e) This section [sections 1058 to 1061 of this title] shall not (1) authorize the assessment of a tax or the collection thereof bydistraint or by a proceeding in court if at the time of the…”

Trumbull Steel Co. v. United States, 1 F. Supp. 762 (Ct. Cl. 1932). “264 ), had therefore expired, and while section 278 (d) of the Revenue Act 1924 (26 USCA § 1061 note) provided that if the assessment was made in time (as it was in the case at bar) *766 the tax could be collected within six years from the time of the assessment, it also…”

Rasmussen v. Brownfield-Canty Carpet Co., 31 F.2d 89 (9th Cir. 1929). “Considering the provisions of section 278(e), 26 USCA § 1062, that the said section shall not authorize the assessment of a tax, or its collection by distraint, or by a proceeding in court, if sueh assessment, distraint, or proceeding was barred by the period of limitation then…”

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