{"identifier":"/us/usc/t26/s139L","title":26,"num":"\u00a7\u202f139L.","heading":"Interest on loans secured by rural or agricultural real property","text":"\u00a7\u202f139L.\nInterest on loans secured by rural or agricultural real property\n(a)\nIn general\nGross income shall not include 25 percent of the interest received by a qualified lender on any qualified real estate loan.\n(b)\nQualified lender\nFor purposes of this section, the term \u201cqualified lender\u201d means\u2014\n(1) any bank or savings association the deposits of which are insured under the Federal Deposit Insurance Act (\n12 U.S.C. 1811\n(2) any State- or federally-regulated insurance company,\n(3) any entity wholly owned, directly or indirectly, by a company that is treated as a bank holding company for purposes of section 8 of the International Banking Act of 1978 (\n(A) such entity is organized, incorporated, or established under the laws of the United States or any State, and\n(B) the principal place of business of such entity is in the United States (including any territory of the United States),\n(4) any entity wholly owned, directly or indirectly, by a company that is considered an insurance holding company under the laws of any State if such entity satisfies the requirements described in subparagraphs (A) and (B) of paragraph (3), and\n(5) with respect to interest received on a qualified real estate loan secured by real estate described in subsection (c)(3)(A), any federally chartered instrumentality of the United States established under section 8.1(a) of the Farm Credit Act of 1971 (\n12 U.S.C. 2279aa\u20131(a)\n(c)\nQualified real estate loan\nFor purposes of this section\u2014\n(1)\nIn general\nThe term \u201cqualified real estate loan\u201d means any loan\u2014\n(A) secured by\u2014\n(i) rural or agricultural real estate, or\n(ii) a leasehold mortgage (with a status as a lien) on rural or agricultural real estate,\n(B) made to a person other than a specified foreign entity (as defined in section 7701(a)(51)), and\n(C) made after the date of the enactment of this section.\nFor purposes of the preceding sentence, the determination of whether property securing such loan is rural or agricultural real estate shall be made as of the time the interest income on such loan is accrued.\n(2)\nRefinancings\nFor purposes of subparagraphs (A) and (C) of paragraph (1), a loan shall not be treated as made after the date of the enactment of this section to the extent that the proceeds of such loan are used to refinance a loan which was made on or before the date of the enactment of this section (or, in the case of any series of refinancings, the original loan was made on or before such date).\n(3)\nRural or agricultural real estate\nThe term \u201crural or agricultural real estate\u201d means\u2014\n(A) any real property which is substantially used for the production of one or more agricultural products,\n(B) any real property which is substantially used in the trade or business of fishing or seafood processing, and\n(C) any aquaculture facility.\nSuch term shall not include any property which is not located in a State or a possession of the United States.\n(4)\nAquaculture facility\nThe term \u201caquaculture facility\u201d means any land, structure, or other appurtenance that is used for aquaculture (including any hatchery, rearing pond, raceway, pen, or incubator).\n(d)\nCoordination with section 265\nIn the case of any qualified real estate loan, section 265 shall be applied\u2014\n(1) by treating any qualified real estate loan for purposes of subsection (a)(2) thereof as an obligation the interest on which is wholly exempt from the taxes imposed by this subtitle,\n(2) by substituting \u201c25 percent of the interest on indebtedness\u201d for \u201cInterest on indebtedness\u201d in such subsection (a)(2),\n(3) by treating 25 percent of the adjusted basis of any qualified real estate loan as adjusted basis of a tax-exempt obligation described in subsection (b)(4)(B) thereof, and\n(4) by substituting \u201c25 percent of the amount of such indebtedness\u201d for \u201cthe amount of such indebtedness\u201d in subsection (b)(6)(A)(a)(ii)\n1\n1 So in original. Probably should be \u201c(b)(6)(A)(ii)\u201d.","url":"https://projectusc.org/usc/t26/s139L.html","content":[{"t":"sec","id":"/us/usc/t26/s139L","children":[{"t":"num","text":"\u00a7\u202f139L."},{"t":"heading","text":"Interest on loans secured by rural or agricultural real property"},{"t":"subsec","id":"/us/usc/t26/s139L/a","children":[{"t":"num","text":"(a)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"Gross income shall not include 25 percent of the interest received by a qualified lender on any qualified real estate loan.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s139L/b","children":[{"t":"num","text":"(b)"},{"t":"heading","text":"Qualified lender"},{"t":"chapeau","text":"For purposes of this section, the term \u201cqualified lender\u201d means\u2014"},{"t":"para","id":"/us/usc/t26/s139L/b/1","children":[{"t":"num","text":"(1)"},{"t":"content","text":" any bank or savings association the deposits of which are insured under the Federal Deposit Insurance Act (","children":[{"t":"ref","text":"12 U.S.C. 1811","href":"/us/usc/t12/s1811","tail":" et seq.),"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s139L/b/2","children":[{"t":"num","text":"(2)"},{"t":"content","text":" any State- or federally-regulated insurance company,","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s139L/b/3","children":[{"t":"num","text":"(3)"},{"t":"chapeau","text":" any entity wholly owned, directly or indirectly, by a company that is treated as a bank holding company for purposes of section 8 of the International Banking Act of 1978 (","children":[{"t":"ref","text":"12 U.S.C. 3106","href":"/us/usc/t12/s3106","tail":") if\u2014"}]},{"t":"subpara","id":"/us/usc/t26/s139L/b/3/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" such entity is organized, incorporated, or established under the laws of the United States or any State, and","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s139L/b/3/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" the principal place of business of such entity is in the United States (including any territory of the United States),","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s139L/b/4","children":[{"t":"num","text":"(4)"},{"t":"content","text":" any entity wholly owned, directly or indirectly, by a company that is considered an insurance holding company under the laws of any State if such entity satisfies the requirements described in subparagraphs (A) and (B) of paragraph (3), and","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s139L/b/5","children":[{"t":"num","text":"(5)"},{"t":"content","text":" with respect to interest received on a qualified real estate loan secured by real estate described in subsection (c)(3)(A), any federally chartered instrumentality of the United States established under section 8.1(a) of the Farm Credit Act of 1971 (","children":[{"t":"ref","text":"12 U.S.C. 2279aa\u20131(a)","href":"/us/usc/t12/s2279aa\u20131/a","tail":")."}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s139L/c","children":[{"t":"num","text":"(c)"},{"t":"heading","text":"Qualified real estate loan"},{"t":"chapeau","text":"For purposes of this section\u2014"},{"t":"para","id":"/us/usc/t26/s139L/c/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"The term \u201cqualified real estate loan\u201d means any loan\u2014"},{"t":"subpara","id":"/us/usc/t26/s139L/c/1/A","children":[{"t":"num","text":"(A)"},{"t":"chapeau","text":" secured by\u2014"},{"t":"clause","id":"/us/usc/t26/s139L/c/1/A/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" rural or agricultural real estate, or","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s139L/c/1/A/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" a leasehold mortgage (with a status as a lien) on rural or agricultural real estate,","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s139L/c/1/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" made to a person other than a specified foreign entity (as defined in section 7701(a)(51)), and","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s139L/c/1/C","children":[{"t":"num","text":"(C)"},{"t":"content","text":" made after the date of the enactment of this section.","tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"For purposes of the preceding sentence, the determination of whether property securing such loan is rural or agricultural real estate shall be made as of the time the interest income on such loan is accrued.","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s139L/c/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Refinancings"},{"t":"content","children":[{"t":"p","text":"For purposes of subparagraphs (A) and (C) of paragraph (1), a loan shall not be treated as made after the date of the enactment of this section to the extent that the proceeds of such loan are used to refinance a loan which was made on or before the date of the enactment of this section (or, in the case of any series of refinancings, the original loan was made on or before such date).","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s139L/c/3","children":[{"t":"num","text":"(3)"},{"t":"heading","text":"Rural or agricultural real estate"},{"t":"chapeau","text":"The term \u201crural or agricultural real estate\u201d means\u2014"},{"t":"subpara","id":"/us/usc/t26/s139L/c/3/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" any real property which is substantially used for the production of one or more agricultural products,","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s139L/c/3/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" any real property which is substantially used in the trade or business of fishing or seafood processing, and","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s139L/c/3/C","children":[{"t":"num","text":"(C)"},{"t":"content","text":" any aquaculture facility.","tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"Such term shall not include any property which is not located in a State or a possession of the United States.","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s139L/c/4","children":[{"t":"num","text":"(4)"},{"t":"heading","text":"Aquaculture facility"},{"t":"content","children":[{"t":"p","text":"The term \u201caquaculture facility\u201d means any land, structure, or other appurtenance that is used for aquaculture (including any hatchery, rearing pond, raceway, pen, or incubator).","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s139L/d","children":[{"t":"num","text":"(d)"},{"t":"heading","text":"Coordination with section 265"},{"t":"chapeau","text":"In the case of any qualified real estate loan, section 265 shall be applied\u2014"},{"t":"para","id":"/us/usc/t26/s139L/d/1","children":[{"t":"num","text":"(1)"},{"t":"content","text":" by treating any qualified real estate loan for purposes of subsection (a)(2) thereof as an obligation the interest on which is wholly exempt from the taxes imposed by this subtitle,","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s139L/d/2","children":[{"t":"num","text":"(2)"},{"t":"content","text":" by substituting \u201c25 percent of the interest on indebtedness\u201d for \u201cInterest on indebtedness\u201d in such subsection (a)(2),","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s139L/d/3","children":[{"t":"num","text":"(3)"},{"t":"content","text":" by treating 25 percent of the adjusted basis of any qualified real estate loan as adjusted basis of a tax-exempt obligation described in subsection (b)(4)(B) thereof, and","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s139L/d/4","children":[{"t":"num","text":"(4)"},{"t":"content","text":" by substituting \u201c25 percent of the amount of such indebtedness\u201d for \u201cthe amount of such indebtedness\u201d in subsection (b)(6)(A)(a)(ii)\u202f","children":[{"t":"ref","text":"1"},{"t":"num","text":"1","tail":"\u202fSo in original. Probably should be \u201c(b)(6)(A)(ii)\u201d."},{"t":"text","text":"\u202fSo in original. Probably should be \u201c(b)(6)(A)(ii)\u201d.","tail":" thereof."}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"}]}]}