Internal Revenue Code · 26 U.S.C.

§ 1301. Averaging of farm income

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. § 1301

At a glance

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

Status: In force
Added: August 5, 1997 by Pub. L. 105–34
Last amended: October 22, 2004 by Pub. L. 108–357
Amendments: 1 dated changes in the source credit
Length: 3 subsections · 371 words · about 2 min to read
Defines: 4 terms
Cross-references: cites 2; cited by 2 Code sections and 21 other regulations
Regulations: 1 issued under this section

¶(a) In general At the election of an individual engaged in a farming business or fishing business, the tax imposed by section 1 for such taxable year shall be equal to the sum of—

¶(1) a tax computed under such section on taxable income reduced by elected farm income, plus

¶(2) the increase in tax imposed by section 1 which would result if taxable income for each of the 3 prior taxable years were increased by an amount equal to one-third of the elected farm income.

Any adjustment under this section for any taxable year shall be taken into account in applying this section for any subsequent taxable year.

¶(b) Definitions In this section—

¶(1) Elected farm income

¶(A) In general The term “elected farm income” means so much of the taxable income for the taxable year—

¶(i) which is attributable to any farming business or fishing business; and

¶(ii) which is specified in the election under subsection (a).

¶(B) Treatment of gains

For purposes of subparagraph (A), gain from the sale or other disposition of property (other than land) regularly used by the taxpayer in such a farming business or fishing business for a substantial period shall be treated as attributable to such a farming business or fishing business.

¶(2) Individual

The term “individual” shall not include any estate or trust.

¶(3) Farming business

The term “farming business” has the meaning given such term by section 263A(e)(4).

¶(4) Fishing business

The term “fishing business” means the conduct of commercial fishing as defined in section 3 of the Magnuson-Stevens Fishery Conservation and Management Act (16 U.S.C. 1802).

¶(c) Regulations The Secretary shall prescribe such regulations as may be appropriate to carry out the purposes of this section, including regulations regarding—

¶(1) the order and manner in which items of income, gain, deduction, or loss, or limitations on tax, shall be taken into account in computing the tax imposed by this chapter on the income of any taxpayer to whom this section applies for any taxable year, and

¶(2) the treatment of any short taxable year.

(Added Pub. L. 105–34, title IX, § 933(a), Aug. 5, 1997, 111 Stat. 881; amended Pub. L. 108–357, title III, § 314(b), Oct. 22, 2004, 118 Stat. 1468.)

Terms defined here

Where the text says “the term … means”. Select a term to jump to its definition.

elected farm income § 1301(b)(1)(A)
farming business § 1301(b)(3)
fishing business § 1301(b)(4)
individual § 1301(b)(2)

Regulations under this section

Treasury regulations (26 CFR) issued under § 1301

§ 1.1301-1 Averaging of farm and fishing income.

Cross-references

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

This section cites 2 other sections

Cited by 2 Code sections

Cited in 21 regulations not issued under it

Amendment history

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

October 22, 2004Amended by Pub. L. 108–357Parts changed in 2004: (a) (b)(1)(A)(i) (b)(4)
August 5, 1997Added by Pub. L. 105–34

Where it sits in the Code

Official notes

Show the Law Revision Counsel's notes (amendments, effective dates)

Editorial Notes

Prior Provisions

A prior section 1301, added Pub. L. 88–272, title II, § 232(a), Feb. 26, 1964, 78 Stat. 106; amended Pub. L. 91–172, title III, § 311(a), Dec. 30, 1969, 83 Stat. 586; Pub. L. 98–369, div. A, title I, § 173(b), (c)(1), July 18, 1984, 98 Stat. 704, placed a limit on the tax attributable to averagable income, prior to repeal by Pub. L. 99–514, title I, §§ 141(a), 151(a), Oct. 22, 1986, 100 Stat. 2117, 2121, effective Dec. 31, 1986.

Another prior section 1301, act Aug. 16, 1954, ch. 736, 68A Stat. 334, related to compensation from an employment, defined “an employment”, and stated the rule with respect to partners, prior to the general revision of this part by Pub. L. 88–272.

A prior section 1302, added Pub. L. 88–272, title II, § 232(a), Feb. 26, 1964, 78 Stat. 106; amended Pub. L. 91–172, title III, § 311(b), Dec. 30, 1969, 83 Stat. 586; Pub. L. 94–455, title VII, § 701(f)(1), Oct. 4, 1976, 90 Stat. 1580; Pub. L. 95–30, title I, § 102(b)(15), May 23, 1977, 91 Stat. 138; Pub. L. 95–600, title I, § 101(d)(2), Nov. 6, 1978, 92 Stat. 2770; Pub. L. 95–615, § 202(g)(5), formerly § 202(f)(5), Nov. 8, 1978, 92 Stat. 3100, renumbered Pub. L. 96–222, title I, § 108(a)(1)(A), Apr. 1, 1980, 94 Stat. 223; Pub. L. 97–34, title I, § 111(b)(3), Aug. 13, 1981, 95 Stat. 194; Pub. L. 97–248, title II, § 265(b)(2)(B), Sept. 3, 1982, 96 Stat. 547; Pub. L. 98–369, div. A, title I, § 173(a), (c)(2)–(4), July 18, 1984, 98 Stat. 703, 704, defined “averagable income” and other terms related to income averaging, prior to repeal by Pub. L. 99–514, title I, §§ 141(a), 151(a), Oct. 22, 1986, 100 Stat. 2117, 2121, effective Dec. 31, 1986.

Another prior section 1302, act Aug. 16, 1964, ch. 736, 68A Stat. 335, related to income from an invention or artistic work, prior to the general revision of this part by Pub. L. 88–272.

A prior section 1303, added Pub. L. 88–272, title II, § 232(a), Feb. 26, 1964, 78 Stat. 107; amended Pub. L. 91–172, title III, § 311(d)(1), Dec. 30, 1969, 83 Stat. 587; Pub. L. 94–455, title XIX, § 1901(b)(8)(G), Oct. 4, 1976, 90 Stat. 1795; Pub. L. 97–34, title I, § 111(b)(4), Aug. 13, 1981, 95 Stat. 194; Pub. L. 99–272, title XIII, § 13206(a), (b), Apr. 7, 1986, 100 Stat. 318, 319, related to individuals eligible for income averaging, prior to repeal by Pub. L. 99–514, title I, §§ 141(a), 151(a), Oct. 22, 1986, 100 Stat. 2117, 2121, effective Dec. 31, 1986.

Another prior section 1303, acts Aug. 16, 1954, ch. 736, 68A Stat. 335, Sept. 22, 1961, Pub. L. 87–293, title II, § 201(b), 75 Stat. 625, related to income from back pay, prior to the general revision of this part by Pub. L. 88–272.

A prior section 1304, added Pub. L. 88–272, title II, § 232(a), Feb. 26, 1964, 78 Stat. 108; amended Pub. L. 91–172, title III, § 311(c), (d)(2), title V, § 515(c)(4), title VIII, §§ 802(c)(5), 803(d)(8), Dec. 30, 1969, 83 Stat. 587, 646, 678, 684; Pub. L. 93–406, title II, § 2005(c)(6), Sept. 2, 1974, 88 Stat. 991; Pub. L. 94–455, title III, § 302(c), title V, § 501(b)(7), title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1555, 1559, 1834; Pub. L. 95–600, title IV, § 401(b)(5), Nov. 6, 1978, 92 Stat. 2867; Pub. L. 95–615, § 202(g)(5), formerly § 202(f)(5), Nov. 8, 1978, 92 Stat. 3100, renumbered Pub. L. 96–222, title I, § 108(a)(1)(A), Apr. 1, 1980, 94 Stat. 223; Pub. L. 97–34, title I, §§ 101(c)(2)(B), 111(b)(3), (4), Aug. 13, 1981, 95 Stat. 183, 194; Pub. L. 97–248, title II, § 265(b)(2)(C), Sept. 3, 1982, 96 Stat. 547, set out special rules for income averaging, prior to repeal by Pub. L. 99–514, title I, §§ 141(a), 151(a), Oct. 22, 1986, 100 Stat. 2117, 2121, effective Dec. 31, 1986.

Another prior section 1304, act Aug. 11, 1955, ch. 804, § 1(a), 69 Stat. 688, related to compensatory damages for patent infringement, prior to the general revision of this part by Pub. L. 88–272.

A prior section 1305, added Pub. L. 88–272, title II, § 232(a), Feb. 26, 1964, 78 Stat. 110; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834, provided for promulgation of regulations for income averaging, prior to repeal by Pub. L. 99–514, title I, §§ 141(a), 151(a), Oct. 22, 1986, 100 Stat. 2117, 2121, effective Dec. 31, 1986.

Another prior section 1305, act Aug. 26, 1957, Pub. L. 85–165, § 1, 71 Stat. 413, related to damages for breach of contract or fiduciary duty, prior to the general revision of this part by Pub. L. 88–272.

A prior section 1306, Pub. L. 85–866, title I, § 58(a), Sept. 2, 1958, 72 Stat. 1646, related to damages received for injuries under the antitrust laws, prior to the general revision of this part by Pub. L. 88–272.

A prior section 1307, act Aug. 16, 1954, ch. 736, 68A Stat. 336, § 1307, formerly § 1304; renumbered § 1305, Aug. 11, 1955, ch. 804, § 1(a), 69 Stat. 688; renumbered § 1306, Aug. 26, 1957, Pub. L. 85–165, § 1, 71 Stat. 413; renumbered § 1307, Sept. 2, 1958, Pub. L. 85–866, title I, § 58(a), 72 Stat. 1646; amended Oct. 16, 1962, Pub. L. 87–834, § 22(a), 76 Stat. 1064, provided rules applicable to this part, prior to the general revision of this part by Pub. L. 88–272.

Amendments

2004—Subsec. (a). Pub. L. 108–357, § 314(b)(1), substituted “farming business or fishing business” for “farming business” in introductory provisions.

Subsec. (b)(1)(A)(i), (B). Pub. L. 108–357, § 314(b)(2), inserted “or fishing business” after “farming business” wherever appearing.

Subsec. (b)(4). Pub. L. 108–357, § 314(b)(3), added par. (4).

Effective Date of 2004 Amendment

Amendment by Pub. L. 108–357 applicable to taxable years beginning after Dec. 31, 2003, see section 314(c) of Pub. L. 108–357, set out as an Effective and Termination Dates of 2004 Amendments note under section 55 of this title.

Effective Date

Pub. L. 105–34, title IX, § 933(c), Aug. 5, 1997, 111 Stat. 882, as amended by Pub. L. 105–277, div. J, title II, § 2011, Oct. 21, 1998, 112 Stat. 2681–902, provided that: “The amendments made by this section [enacting this section] shall apply to taxable years beginning after December 31, 1997.”