Remember... Agriculture only!

The Farm Transition Webinar on Tuesday, May 13, 2025, raised some questions about why Farmers First Trust limits the seller's property and products to agriculture and agricultural products. The answer is provided by the 2019 Creighton University Law Review, Vol 52, pgs. 153-168 "INTERNAL REVENUE CODE SECTION 453: “MONETIZING” THE TAX DEFERRED INSTALLMENT SALE OF FARMLAND AND FARM COMMODITIES", which provides the background for our adherence to IRS guidelines for Section §453. This article was written by Darren Carlson, J.D., a partner at the firm Carlson Blakeman in Omaha, Nebraska. Find the article here: Creighton University Law Review.

pg. 159: "Most of the key changes in the Tax Reform Act of 1986 were contained

in the repeal of old version of Section 453A and the passage of new Section 453A. It is key to monetized installment sales transactions that the new Section 453A expressly exempted property used or produced in the trade or business of farming."36

pg. 161: "In 1988 when Congress passed the Omnibus Budget Reconciliation Act of 1987 it included Code § 453A(b)(3), which exempted farm property from both the interest charge exception and the pledge rule. The exemption extends to “any property used or produced in the trade or business of farming, within the meaning of Code § 2032(A)(e)(4) or (5).”52 The definition of farm includes “stock, dairy, poultry, fruit, furbearing animal, as well as truck farms, plantations, ranches, nurseries, ranges, greenhouses, and other similar structures used primarily for the raising of agricultural or horticultural commodities, orchards, and woodlands.”53

pg. 162: "The express exception to the pledge rule is what allows monetized installment sales reporting to be available for property used in the trade or business of farming."58

footnote 36: See I.R.C. § 453A(b)(3) (2012) (exempting from the restrictions of §453A “any property used or produced in the trade or business of farming. . .”)

footnote 53: See I.R.C. § 453A(b)(4).

footnote 58: See I.R.C. § 453(A)(b)(3)(B) (providing an express exception for property used in the trade or business of farming, as defined in I.R.C. § 2032(A)(e)(4)(5)).

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