§ 447.
(a)
General rule
Except as otherwise provided by law, the taxable income from farming of—
(1)
a corporation engaged in the trade or business of farming, or
(2)
a partnership engaged in the trade or business of farming, if a corporation is a partner in such partnership,
shall be computed on an accrual method of accounting. This section shall not apply to the trade or business of operating a nursery or sod farm or to the raising or harvesting of trees (other than fruit and nut trees).
(e)
Certain annual accrual accounting methods
(1)
In general
Notwithstanding subsection (a) or section 263A, if—
(A)
for its 10 taxable years ending with its first taxable year beginning after December 31, 1975, a corporation or qualified partnership used an annual accrual method of accounting with respect to its trade or business of farming,
(B)
such corporation or qualified partnership raises crops which are harvested not less than 12 months after planting, and
(C)
such corporation or qualified partnership has used such method of accounting for all taxable years intervening between its first taxable year beginning after December 31, 1975, and the taxable year,
such corporation or qualified partnership may continue to employ such method of accounting for the taxable year with respect to its qualified farming trade or business.
(2)
Annual accrual method of accounting defined
(3)
Certain nonrecognition transfers
For purposes of this subsection, if—
(A)
a corporation acquired substantially all the assets of a qualified farming trade or business from another corporation in a transaction in which no gain or loss was recognized to the transferor or transferee corporation, or
(B)
a qualified partnership acquired substantially all the assets of a qualified farming trade or business from one of its partners in a transaction to which section 721 applies,
the transferee corporation or qualified partnership shall be deemed to have computed its taxable income on an annual accrual method of accounting during the period for which the transferor corporation or partnership computed its taxable income from such trade or business on an annual accrual method.
(4)
Qualified partnership defined
For purposes of this subsection—
(A)
Qualified partnership
The term “qualified partnership” means a partnership which is engaged in a qualified farming trade or business and each of the partners of which is a corporation other than—
(ii)
a personal holding company (within the meaning of section 542(a)).
(B)
Qualified farming trade or business
(i)
In general
The term “qualified farming trade or business” means the trade or business of farming—
(I)
sugar cane,
(II)
any plant with a preproductive period (as defined in section 263A(e)(3)) of 2 years or less, and
(III)
any other plant (other than any citrus or almond tree) if an election by the corporation under this subparagraph is in effect.
In the case of a partnership and for purposes of paragraph (3)(A), subclauses (II) and (III) shall not apply.
(Added [Pub. L. 94–455, title II, § 207(c)(1)(A)], Oct. 4, 1976, [90 Stat. 1538]; amended [Pub. L. 95–600, title III], §§ 351(a), 353(a), title VII, §§ 701(l)(1), 703(d), Nov. 6, 1978, [92 Stat. 2846], 2847, 2906, 2939; [Pub. L. 97–248, title II, § 230(a)], Sept. 3, 1982, [96 Stat. 495]; [Pub. L. 97–354, § 5(a)(28)], (29), Oct. 19, 1982, [96 Stat. 1695]; [Pub. L. 99–514, title VIII, § 803(b)(7)], Oct. 22, 1986, [100 Stat. 2356]; [Pub. L. 100–203, title X, § 10205(a)]–(c), Dec. 22, 1987, [101 Stat. 1330–395] to 1330–397; [Pub. L. 100–647, title I, § 1008(b)(5)], (6), Nov. 10, 1988, [102 Stat. 3438]; [Pub. L. 101–508, title XI, § 11702(b)], Nov. 5, 1990, [104 Stat. 1388–514]; [Pub. L. 105–34, title X, § 1081(a)], Aug. 5, 1997, [111 Stat. 949]; [Pub. L. 115–97, title I, § 13102(a)(5)], Dec. 22, 2017, [131 Stat. 2102].)