One more time on the Farm Bill… I reported in my blog Would You Like Some Good News? Success Regarding Like-Kind Status in the Farm Bill on January 25, 2008, that the provision in the Senate version of the bill that had sought to re-define like-kind status as it pertains to subsidized agricultural land (see earlier blog The Next Verse… Today’s Update on the Farm Bill and others) had been pulled from the bill in conference committee. While I believe that remains true, a letter I received yesterday from Senator Charles Grassley (R-IA) raises a question or two in my mind.

In his letter, which is in response to the numerous letters and communiqués that he has received from me on the subject, Senator Grassley spends the first few paragraphs providing background on the development of the bill in the Senate. It is clear from his writing that he understands both the pros and the cons of the issue. Let me quote the end of the fourth paragraph and perhaps you will understand my confusion: “This final provision treats subsidized real estate used for farming purposes and improved real estate used for farming purposes as like kind. However, real estate that is not used for farming purposes would be disallowed like kind treatment with subsidized real estate used for farming purposes. The 2007 farm bill passed the Senate, with this provision, on December 14, 2007, by a vote of 79-14.” (Emphasis added.)

Actually, without some further perspective, you might not understand my confusion. Consider this progression of events:

• 12/14/07 – Farm Bill passes Senate as described above.
• Mid-January – Bill goes into conference committee between the House of Representatives and the Senate to iron out differences in the two bills. (Reminder: the House version did not have the provision to redefine like-kind status.)
• 1/25/08 – The Federation of Exchange Accommodators (FEA, the association to which I belong) announces that Senator Max Baucus (D-MT) now opposes the provision that redefines like-kind status. The announcement from the FEA is presented as a victory.
• 1/28/08 – Senator Charles Grassley writes the letter that is quoted above.

While Senator Grassley’s quoted comments indicate that the provision seeking to deny like-kind status to subsidized farmland as it relates to improved property used for farming purposes has been deleted, it appears that perhaps another layer has been added: Repeating, from the letter, “real estate that is not used for farming purposes would be disallowed like kind treatment with subsidized real estate used for farming purposes.” That, in my view, is a redefinition of like-kind status.

More as it develops…

Ken Tharp

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