Internal Revenue Code · 26 U.S.C.

§ 1257. Disposition of converted wetlands or highly erodible croplands

In force Text current through Public Law 119-121 (October 9, 2026) release point 119-121

Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).

Cite as 26 U.S.C. § 1257

At a glance

Read from the text, the source credit and the official notes. Not part of the law.

Status: In force
Added: October 22, 1986 by Pub. L. 99–514
Last amended: March 23, 2018 by Pub. L. 115–141
Amendments: 2 dated changes in the source credit
Length: 4 subsections · 370 words · about 2 min to read
Defines: 2 terms
Cross-references: cites 3; cited by 0 Code sections and 0 other regulations

¶(a) Gain treated as ordinary income

Any gain on the disposition of converted wetland or highly erodible cropland shall be treated as ordinary income. Such gain shall be recognized notwithstanding any other provision of this subtitle, except that this section shall not apply to the extent such gain is recognized as ordinary income under any other provision of this part.

¶(b) Loss treated as long-term capital loss

Any loss recognized on the disposition of converted wetland or highly erodible cropland shall be treated as a long-term capital loss.

¶(c) Definitions For purposes of this section—

¶(1) Converted wetland The term “converted wetland” means any converted wetland (as defined in section 1201(a)(7) of the Food Security Act of 1985 (16 U.S.C. 3801(7))) held—

¶(A) by the person whose activities resulted in such land being converted wetland, or

¶(B) by any other person who at any time used such land for farming purposes.

¶(2) Highly erodible cropland

The term “highly erodible cropland” means any highly erodible cropland (as defined in section 1201(a)(10) of the Food Security Act of 1985 (16 U.S.C. 3801(10))), if at any time the taxpayer used such land for farming purposes (other than the grazing of animals).

¶(3) Treatment of successors

If any land is converted wetland or highly erodible cropland in the hands of any person, such land shall be treated as converted wetland or highly erodible cropland in the hands of any other person whose adjusted basis in such land is determined (in whole or in part) by reference to the adjusted basis of such land in the hands of such person.

¶(d) Special rules

Under regulations prescribed by the Secretary, rules similar to the rules applicable under section 1245 shall apply for purposes of subsection (a). For purposes of sections 170(e) and 751(c), amounts treated as ordinary income under subsection (a) shall be treated in the same manner as amounts treated as ordinary income under section 1245.

(Added Pub. L. 99–514, title IV, § 403(a), Oct. 22, 1986, 100 Stat. 2222; amended Pub. L. 108–27, title III, § 302(e)(4)(B)(ii), May 28, 2003, 117 Stat. 764; Pub. L. 115–141, div. U, title IV, § 401(a)(177), (178), Mar. 23, 2018, 132 Stat. 1192.)

Terms defined here

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converted wetland § 1257(c)(1)
highly erodible cropland § 1257(c)(2)

Cross-references

Computed from the citations in the text of Title 26 and 26 CFR.

This section cites 3 other sections

Amendment history

From the source credit and the official notes, newest first.

March 23, 2018Amended by Pub. L. 115–141Parts changed in 2018: (c)(1) (c)(2)
May 28, 2003Amended by Pub. L. 108–27Parts changed in 2003: (d)
October 22, 1986Added by Pub. L. 99–514

Where it sits in the Code

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Official notes

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Editorial Notes

Amendments

2018—Subsec. (c)(1). Pub. L. 115–141, § 401(a)(177), substituted “section 1201(a)(7)” for “section 1201(4)” and “16 U.S.C. 3801(7)” for “16 U.S.C. 3801(4)” in introductory provisions.

Subsec. (c)(2). Pub. L. 115–141, § 401(a)(178), substituted “section 1201(a)(10)” for “section 1201(6)” and “16 U.S.C. 3801(10)” for “16 U.S.C. 3801(6)”.

2003—Subsec. (d). Pub. L. 108–27 struck out “, 341(e)(12),” after “170(e)”.

Effective Date of 2003 Amendment

Amendment by Pub. L. 108–27 applicable, except as otherwise provided, to taxable years beginning after Dec. 31, 2002, see section 302(f) of Pub. L. 108–27, set out as an Effective and Termination Dates of 2003 Amendment note under section 1 of this title.

Effective Date

Pub. L. 99–514, title IV, § 403(c), Oct. 22, 1986, 100 Stat. 2222, provided that: “The amendments made by this section [enacting this section] shall apply to dispositions of converted wetland or highly erodible cropland (as defined in section 1257(c) of the Internal Revenue Code of 1986 as added by this section) first used for farming after March 1, 1986, in taxable years ending after that date.”