Treasury Regulations · 26 CFR
§ 1.1252-1. General rule for treatment of gain from disposition of farm land.
Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).
Regulation under 26 U.S.C. § 1252
Cite as 26 CFR § 1.1252-1
At a glance
Read from the text and its source citation. Not part of the regulation.
- Status
- In the current eCFR
- Issued
- May 7, 1976 by T.D. 7418
- Last amended
- June 11, 1976
- Issued under
- 26 U.S.C. § 1252
- Length
- 1,957 words · about 9 min to read
- Defines
- 2 terms
- Cross-references
- cites 9 Code sections and 4 regulations; cited by 3
(a) The applicable percentage of the amount computed in subdivision (ii) of this subparagraph, or
(b) The amount computed in subdivision (iii) of this subparagraph.
(a) The aggregate of the deductions allowed, in any taxable year any day of which falls within the period the taxpayer held (or is considered to have held) the farm land, under sections 175 (relating to soil and water conservation expenditures) and 182 (relating to expenditures by farmers for clearing land) for expenditures paid or incurred after December 31, 1969, with respect to the farm land disposed of, minus
(b) The amount of gain recognized as ordinary income under section 1251(c)(1) (relating to gain from disposition of property used in farming where farm losses offset nonfarm income) upon such disposition of such land.
(a) The gain realized, that is, the excess of the amount realized (in the case of a sale, exchange, or involuntary conversion) or the fair market value of the farm land (in the case of any other disposition), over the adjusted basis of the farm land, minus
(b) The amount of gain recognized as ordinary income under section 1251(c)(1) upon such disposition of such land.
| If the farm land is disposed of— | The applicable percentage is— |
| Within 5 years after the date it was acquired | 100 percent. |
| Within the sixth year after it was acquired | 80 percent. |
| Within the seventh year after it was acquired | 60 percent. |
| Within the eighth year after it was acquired. | 40 percent. |
| Within the ninth year after it was acquired. | 20 percent. |
| Within the 10th year after it was acquired and thereafter. | 0 percent. |
Individual A uses the calendar year as his taxable year. On April 10, 1975, he sells for $75,000 a parcel of farm land which he had acquired on January 5, 1970, with an adjusted basis of $52,500 for a realized gain of $22,500. The aggregate of the deductions allowed under sections 175 and 182 with respect to such land is $18,000 and all of such amount was allowed for 1970. Under the stated facts, none of the $22,500 gain realized is recognized as ordinary income under section 1251(c)(1) as there is no potential gain (as defined in section 1251(e)(5)) with respect to the farm land. Since no gain is recognized as ordinary income under section 1251(c)(1), and since the applicable percentage, 80 percent, of the aggregate of the deductions allowed under sections 175 and 182, $18,000, or $14,400, is lower than the gain realized, $22,500, the amount of gain recognized as ordinary income under section 1252(a)(1) is $14,400. The remaining $8,100 of the gain may be treated as gain from the sale or exchange of property described in section 1231.
Assume the same facts as in example (2) of paragraph (b)(6) of § 1.1251-1. Assume further that the aggregate of the amount of sections 175 and 182 deductions allowable to the M corporation is equal to the amount allowed. Under paragraph (a)(1) of the section, $5,000 is recognized as ordinary income under section 1252(a)(1) upon the disposition of the land as a dividend, computed as follows:
| (1) Aggregate of deductions allowed under sections 175 and 182 | $18,000 |
| (2) Minus: Gain recognized as ordinary income under section 1251(c)(1) | $13,000 |
| (3) Difference | $5,000 |
| (4) Multiply: Applicable percentage for property disposed of within the fifth year after it was acquired | 100% |
| (5) Amount in paragraph (a)(1)(i)(a) of this section | $5,000 |
| (6) Gain realized (fair market value $67,500, less adjusted basis, $45,000) | $22,500 |
| (7) Minus: Amount in line (2) | $13,000 |
| (8) Amount in paragraph (a)(1)(i)(b) of this section | $9,500 |
| (9) Lower of line (5) or line (8) | $5,000 |
The gain realized, $22,500, minus the sum of the gain recognized as ordinary income under section 1251(c)(1), $13,000, and under section 1252(a)(1), $5,000, equals $4,500. Assuming section 311(d) (relating to certain distributions of appreciated property to redeem stock) does not apply, under section 311(a) the corporation does not recognize gain on account of the $4,500.
Assume the same facts as in example (2) of this paragraph, except that M contracted to sell the land for $67,500 which would be paid in 10 equal payments of $6,750 each, plus a sufficient amount of interest so that section 483 does not apply. Assume further that the remaining gain of $4,500 is treated as gain from the sale or exchange of property described in section 1231. M properly elects under section 453 to report under the installment method gain of $13,000 to which section 1251(c)(1) applies, gain of $5,000 to which section 1252(a)(1) applies, and gain of $4,500 to which section 1231 applies. Since the total gain realized on the sale was $22,500, the gross profit realized on each installment payment is $2,250, i.e., $6,750 × ($67,500). Accordingly, the treatment of the income to be reported on each installment payment is as follows:
| Payment No. | Applicable sections | ||
|---|---|---|---|
| 1251 | 1252 | 1231 | |
| 1 | $2,250 | ||
| 2 | 2,250 | ||
| 3 | 2,250 | ||
| 4 | 2,250 | ||
| 5 | 2,250 | ||
| 6 | 1,750 | $500 | |
| 7 | 2,250 | ||
| 8 | 2,250 | ||
| 9 | $2,250 | ||
| 10 | 2,250 | ||
| Totals | 13,000 | 5,000 | 4,500 |
[T.D. 7418, 41 FR 18831, May 7, 1976; 41 FR 23669, June 11, 1976]
Terms defined here
Where the text says “the term … means”. Select a term to jump to its definition.
Cross-references
Computed from the citations in the text of 26 CFR.
Code sections it cites
- § 1252 Gain from disposition of farm land
- § 1231 Property used in the trade or business and involuntary conversions
- § 175 Soil and water conservation expenditures; endangered species recovery expenditures
- § 1251 Repealed
- § 267 Losses, expenses, and interest with respect to transactions between related taxpayers
- § 332 Complete liquidations of subsidiaries
- § 453 Installment method
- § 311 Taxability of corporation on distribution
- § 483 Interest on certain deferred payments
Regulations it cites
- § 1.1252-2 Special rules.
- § 1.1245-1 General rule for treatment of gain from dispositions of certain depreciable property.
- § 1.1245-6 Relation of section 1245 to other sections.
- § 1.1251-1 General rule for treatment of gain from disposition of property used in farming where farm losses offset nonfarm income.
Cited by 3 other regulations
Amendment history
From the source citation at the end of the section, newest first. T.D. is a Treasury decision; FR is the Federal Register.
- Amended (41 FR 23669)
- Issued by T.D. 7418 (41 FR 18831)
Where it sits in 26 CFR
- Subchapter A Income tax
- Part 1 Income taxes
- Special Rules for Determining Capital Gains and Losses
Nearby sections
- § 1.1251-1 General rule for treatment of gain from disposition of property used in farming where farm losses offset nonfarm income.
- § 1.1251-2 Excess deductions account.
- § 1.1251-3 Definitions relating to section 1251.
- § 1.1251-4 Exceptions and limitations.
- § 1.1252-1 General rule for treatment of gain from disposition of farm land.
- § 1.1252-2 Special rules.
- § 1.1254-0 Table of contents for section 1254 recapture rules.
- § 1.1254-1 Treatment of gain from disposition of natural resource recapture property.
- § 1.1254-2 Exceptions and limitations.