Section 10306: Equitable Treatment of Certain Entities

Section 10306: Equitable Treatment of Certain Entities

Making Farm Rules Fair for More Farm Groups

Before, some types of farm groups—like partnerships and teams of farmers working together—couldn’t always get the same farm money (payments) or had different rules.

Now, the law says:

👉 Farm teams like partnerships, LLCs, and S corporations are all going to be treated the same. These are called “qualified pass-through entities.” That’s just a fancy name for farm groups where the money “passes through” to the people doing the work.

👉 These groups will now:

  • Be counted fairly when applying for farm help 💰

  • Have the same rules as other farmers 👩‍🌾👨‍🌾

  • Still have to show they’re actually farming, not just signing papers.

💡 In short: This rule helps small farm teams and groups get equal treatment and farm money if they’re really doing the work.

Here's the original:

SEC. 10306. EQUITABLE TREATMENT OF CERTAIN ENTITIES.
    (a) In General.--Section 1001 of the Food Security Act of 1985 (7 
U.S.C. 1308) is amended--
        (1) in subsection (a)--
            (A) by redesignating paragraph (5) as paragraph (6); and
            (B) by inserting after paragraph (4) the following:
        ``(5) Qualified pass-through entity.--The term `qualified pass-
    through entity' means--
            ``(A) a partnership (within the meaning of subchapter K of 
        chapter 1 of the Internal Revenue Code of 1986);
            ``(B) an S corporation (as defined in section 1361 of that 
        Code);
            ``(C) a limited liability company that does not 
        affirmatively elect to be treated as a corporation; and
            ``(D) a joint venture or general partnership.'';
        (2) in subsections (b) and (c), by striking ``except a joint 
    venture or general partnership'' each place it appears and 
    inserting ``except a qualified pass-through entity''; and
        (3) in subsection (d), by striking ``subtitle B of title I of 
    the Agricultural Act of 2014 or''.
    (b) Attribution of Payments.--Section 1001(e)(3)(B)(ii) of the Food 
Security Act of 1985 (7 U.S.C. 1308(e)(3)(B)(ii)) is amended--
        (1) in the clause heading, by striking ``joint ventures and 
    general partnerships'' and inserting ``qualified pass-through 
    entities'';
        (2) by striking ``a joint venture or a general partnership'' 
    and inserting ``a qualified pass-through entity'';
        (3) by striking ``joint ventures and general partnerships'' and 
    inserting ``qualified pass-through entities''; and
        (4) by striking ``the joint venture or general partnership'' 
    and inserting ``the qualified pass-through entity''.
    (c) Persons Actively Engaged in Farming.--Section 1001A(b)(2) of 
the Food Security Act of 1985 (7 U.S.C. 1308-1(b)(2)) is amended--
        (1) subparagraphs (A) and (B), by striking ``a general 
    partnership, a participant in a joint venture'' each place it 
    appears and inserting ``a qualified pass-through entity''; and
        (2) in subparagraph (C), by striking ``a general partnership, 
    joint venture, or similar entity'' and inserting ``a qualified 
    pass-through entity or a similar entity''.
    (d) Joint and Several Liability.--Section 1001B(d) of the Food 
Security Act of 1985 (7 U.S.C. 1308-2(d)) is amended by striking 
``partnerships and joint ventures'' and inserting ``qualified pass-
through entities''.
    (e) Exclusion From AGI Calculation.--Section 1001D(d) of the Food 
Security Act of 1985 (7 U.S.C. 1308-3a(d)) is amended by striking ``, 
general partnership, or joint venture'' each place it appears.

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