26 U.S.C. § 1257 — Disposition of converted wetlands or highly erodible croplands

(a) Gain treated as ordinary income. Any gain from disposing of converted wetland or highly erodible cropland is treated as ordinary income. The gain is recognized despite other provisions of this subtitle, except to the extent another provision of this part already recognizes it as ordinary income.

(b) Loss treated as long-term capital loss. Any loss recognized from disposing of converted wetland or highly erodible cropland is treated as a long-term capital loss.

(c) Definitions. For this section: (1) “Converted wetland” means converted wetland as defined in section 1201(a)(7) of the Food Security Act of 1985, held either (A) by the person whose activities caused the land to become converted wetland, or (B) by another person who at any time used the land for farming. (2) “Highly erodible cropland” means highly erodible cropland as defined in section 1201(a)(10) of that Act, if the taxpayer^* at any time used the land for farming, other than grazing animals. (3) If land is converted wetland or highly erodible cropland in one person's hands, it is treated that way in the hands of another person whose adjusted basis in the land is determined wholly or partly by reference to the first person's adjusted basis.

(d) Special rules. Under regulations issued by the Secretary^*, rules similar to the rules under section 1245 apply for subsection (a). For sections 170(e) and 751(c), amounts treated as ordinary income under subsection (a) are treated the same way as amounts treated as ordinary income under section 1245.