# § 1301. Averaging of farm income
**(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—
Any adjustment under this section for any taxable year shall be taken into account in applying this section for any subsequent taxable year.
**(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.
**(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** 16 U.S.C. 1802
The term “fishing business” means the conduct of commercial fishing as defined in section 3 of the Magnuson-Stevens Fishery Conservation and Management Act ().
**(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.
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**Source Credit**: (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.)
## Editorial Notes
### Prior Provisions
A prior section 1301, added , , ; amended , , ; , (c)(1), , , placed a limit on the tax attributable to averagable income, prior to repeal by , §§ 141(a), 151(a), , , 2121, effective .
Another prior section 1301, , , 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 .
A prior section 1302, added , , ; amended , , ; , , ; , , ; , , ; , formerly § 202(f)(5), , , renumbered , , ; , , ; , , ; , (c)(2)–(4), , , 704, defined “averagable income” and other terms related to income averaging, prior to repeal by , §§ 141(a), 151(a), , , 2121, effective .
Another prior section 1302, , , related to income from an invention or artistic work, prior to the general revision of this part by .
A prior section 1303, added , , ; amended , , ; , , ; , , ; , (b), , , 319, related to individuals eligible for income averaging, prior to repeal by , §§ 141(a), 151(a), , , 2121, effective .
Another prior section 1303, acts , , , , , related to income from back pay, prior to the general revision of this part by .
A prior section 1304, added , , ; amended , (d)(2), title V, § 515(c)(4), title VIII, §§ 802(c)(5), 803(d)(8), , , 646, 678, 684; , , ; , title V, § 501(b)(7), title XIX, § 1906(b)(13)(A), , , 1559, 1834; , , ; , formerly § 202(f)(5), , , renumbered , , ; , §§ 101(c)(2)(B), 111(b)(3), (4), , , 194; , , , set out special rules for income averaging, prior to repeal by , §§ 141(a), 151(a), , , 2121, effective .
Another prior section 1304, , , related to compensatory damages for patent infringement, prior to the general revision of this part by .
A prior section 1305, added , , ; amended , , , provided for promulgation of regulations for income averaging, prior to repeal by , §§ 141(a), 151(a), , , 2121, effective .
Another prior section 1305, act , , , related to damages for breach of contract or fiduciary duty, prior to the general revision of this part by .
A prior section 1306, , , , related to damages received for injuries under the antitrust laws, prior to the general revision of this part by .
A prior section 1307, , , § 1307, formerly § 1304; renumbered § 1305, , ; renumbered § 1306, , , ; renumbered § 1307, , , ; amended , , , provided rules applicable to this part, prior to the general revision of this part by .
### Amendments
2004—Subsec. (a). , substituted “farming business or fishing business” for “farming business” in introductory provisions.
Subsec. (b)(1)(A)(i), (B). , inserted “or fishing business” after “farming business” wherever appearing.
Subsec. (b)(4). , added par. (4).
## Statutory Notes and Related Subsidiaries
### Effective Date of 2004 Amendment
Amendment by applicable to taxable years beginning after , see , set out as an Effective and Termination Dates of 2004 Amendments note under .
### Effective Date
> “The amendments made by this section [enacting this section] shall apply to taxable years beginning after
>
> .”
, , , as amended by , , , provided that: