LC 11 An act establishing a 100% Montana limited 



blended grain marketing program; authorizing 

 the Department of Agriculture to administer 

 the program; and granting rulemaking 

 authority. 



LC 12 An act limiting the amount of farm losses that 

 may be allowed as a deduction against nonfarm 

 income in computing adjusted gross income for 

 Montana individual income tax purposes; 

 amending sections 15-30-101, 15-30-111, 

 15-30-117, and 15-30-131, MCA; and providing a 

 retroactive applicability date. 



Hearing on Limiting Farm Loss Deductions , 



The meeting began with presentation of LC 12 by 

 Representative Holliday. Representative Holliday opened 

 by stating that she requested the bill to address the 

 problem of tax-shelter farming in eastern Montana. She 

 explained that tax-shelter farming has led to sodbusting 

 and other abuses, including speculation in farmland. In 

 support of LC 12, Representative Holliday submitted a 

 report she requested from the Montana Department of 

 Revenue. This report explained that tax-shelter farming 

 is a situation in which a firm that otherwise would not 

 be engaged in farming engages in farming for the 

 purpose of sheltering nonfarm income from taxes. 

 Through the tax shelter, the farming operation provides 

 deductions, which decrease the amount of income subject 

 to tax, and tax credits, which directly offset tax 

 liabilities. The situation also provides opportunities 

 to convert ordinary income into capital gains, which are 

 taxed at much lower rates than ordinary income. The 

 report explained that the use of farming operations for 



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