424
Opinion of the Court
In § 968 of the Taxpayer Relief Act of 1997, Congress amended § 1042 of the Internal Revenue Code to permit owners of certain food refiners and processors to defer the recognition of gain if they sell their stock to eligible farmers' cooperatives.4 The purpose of the amendment, as repeatedly explained by its sponsors, was "to facilitate the transfer of refiners and processors to farmers' cooperatives." 5 The
4 Section 968(a) of the Taxpayer Relief Act of 1997 amended 26 U. S. C. § 1042 by adding a new subsection (g), which defined the sellers eligible for the exemption as follows:
"(2) QUALIFIED REFINER OR PROCESSOR.—For purposes of this subsection, the term 'qualified refiner or processor' means a domestic corporation—
"(A) substantially all of the activities of which consist of the active conduct of the trade or business of refining or processing agricultural or horticultural products, and
"(B) which, during the 1-year period ending on the date of the sale, purchases more than one-half of such products to be refined or processed from—
"(i) farmers who make up the eligible farmers' cooperative which is purchasing stock in the corporation in a transaction to which this subsection is to apply, or
"(ii) such cooperative." 111 Stat. 896.
5 H. R. Rep. No. 105-148, p. 420 (1997); see also 141 Cong. Rec. S18739 (Dec. 15, 1995) (Senator Hatch, introducing a previous version of the bill, stating that it "would provide farmers who form farmers cooperatives the opportunity for an ownership interest in the processing and marketing of their products"); ibid. (Senator Craig, cosponsor of a previous bill, stating that "[c]urrently, farmers cannot compete with other business entities . . . in buying such [processing] businesses because of the advantages inherent in the tax deferrals available in transactions with these other purchases"; bill "would be helpful to farmers cooperatives"); App. 116-117 (Letter from Congresspersons Roberts and Stenholm (Dec. 1, 1995)) (congressional sponsors stating that a previous version of the bill was intended to "provide American farmers a more firm economic footing and more control over their economic destiny. We believe this proposal will help farmers, through their cooperatives, purchase facilities to refine and process their raw commodities into value-added products. . . . It will encourage farmers to help themselves in a more market-oriented environment by vertically integrating. If this legislation is passed, we are confident that, 10 years from now, we will look on this bill as one of the most beneficial actions Congress took for U. S. farmers").
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