S.Amdt. 3599

SA 3599. Mr. CRAPO (for himself and Mr. Bennet) submitted an
amendment intended to be proposed to amendment SA 3464 submitted by Mr.
Thune (for himself and Mr. Nelson) to the bill H.R. 636, to amend the
Internal Revenue Code of 1986 to permanently extend increased expensing
limitations, and for other purposes; which was ordered to lie on the
table; as follows:

At the appropriate place, insert the following:

SEC. ___. FACILITATE WATER LEASING AND WATER TRANSFERS TO
PROMOTE CONSERVATION AND EFFICIENCY.

(a) In General.--Paragraph (12) of section 501(c) of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new subparagraph:
``(I) Treatment of mutual ditch irrigation companies.--
``(i) In general.--In the case of a mutual ditch or
irrigation company or of a like organization to a mutual
ditch or irrigation company, subparagraph (A) shall be
applied without taking into account any income received or
accrued--

``(I) from the sale, lease, or exchange of fee or other
interests in real property, including interests in water,
``(II) from the sale or exchange of stock in a mutual ditch
or irrigation company (or in a like organization to a mutual
ditch or irrigation company) or contract rights for the
delivery or use of water, or
``(III) from the investment of proceeds from sales, leases,
or exchanges under subclauses (I) and (II),

except that any income received under subclause (I), (II), or
(III) which is distributed or expended for expenses (other
than for operations, maintenance, and capital improvements)
of the mutual ditch or irrigation company or of the like
organization to a mutual ditch or irrigation company (as the
case may be) shall be treated as nonmember income in the year
in which it is distributed or expended. For purposes of the
preceding sentence, expenses (other than for operations,
maintenance, and capital improvements) include expenses for
the construction of conveyances designed to deliver water
outside of the system of the mutual ditch or irrigation
company or of the like organization.
``(ii) Treatment of organizational governance.--In the case
of a mutual ditch or irrigation company or of a like
organization to a mutual ditch or irrigation company, where
State law provides that such a company or organization may be
organized in a manner that permits voting on a basis which is
pro rata to share ownership on corporate governance matters,
subparagraph (A) shall be applied without taking into account
whether its member shareholders have one vote on corporate
governance matters per share held in the corporation. Nothing
in this clause shall be construed to create any inference
about the requirements of this subsection for companies or
organizations not included in this clause.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after the date of the
enactment of this Act.
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