H.R. 8591 — No Capital Gains Tax on Family Farms Act

This section establishes a new tax exclusion under new IRC §121A for gain from the sale or exchange of qualified farm property—defined as U.S. real property owned and used by the taxpayer for farming purposes (per IRC §2032A(e)) for periods aggregating at least 2 years in the 8-year period ending on the sale date—to a qualified family member (i.e., taxpayer's spouse; lineal descendant of taxpayer, spouse, or either parent, or spouse thereof; adopted child treated as by blood). The transferee's basis is the transferor's adjusted basis immediately before the sale, but steps up to the property's fair market value at sale if held without sale, exchange, or disposition for 10 years thereafter. Taxpayers may elect out of the exclusion (similar to IRC §121(f)), and Treasury is directed to issue regulations; applies to sales after enactment.