---
kind: "section"
citation: "26 U.S.C. § 1257"
title: "26"
title_heading: "Internal Revenue Code"
number: "1257"
heading: "Disposition of converted wetlands or highly erodible croplands"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/1257"
units:
  - "Subtitle A — Income Taxes"
  - "Chapter 1 — Normal Taxes and Surtaxes"
  - "Subchapter P — Capital Gains and Losses"
  - "Part IV — Special Rules for Determining Capital Gains and Losses"
---

# §1257. Disposition of converted wetlands or highly erodible croplands

- (a) **Gain treated as ordinary income—** Any gain on the [disposition](/usc/26/424.md?p=c-1) of converted wetland or highly erodible cropland shall be treated as ordinary income. Such gain shall be recognized notwithstanding any other provision of this subtitle, except that this section shall not apply to the extent such gain is recognized as ordinary income under any other provision of this part.
- (b) **Loss treated as long-term capital loss—** Any loss recognized on the [disposition](/usc/26/424.md?p=c-1) of converted wetland or highly erodible cropland shall be treated as a long-term capital loss.
- (c) **Definitions—** For purposes of this section—
  - (1) **Converted wetland—** The term “converted wetland” means any converted wetland (as defined in section 1201(a)(7) of the Food Security Act of 1985 ([16 U.S.C. 3801(7)](/usc/16/3801.md))) held—
    - (A) by the person whose activities resulted in such land being converted wetland, or
    - (B) by any other person who at any time used such land for farming purposes.
  - (2) **Highly erodible cropland—** The term “highly erodible cropland” means any highly erodible cropland (as defined in section 1201(a)(10) of the Food Security Act of 1985 ([16 U.S.C. 3801(10)](/usc/16/3801.md))), if at any time the [taxpayer](/usc/26/1313.md?p=b) used such land for farming purposes (other than the grazing of animals).
  - (3) **Treatment of successors—** If any land is converted wetland or highly erodible cropland in the hands of any person, such land shall be treated as converted wetland or highly erodible cropland in the hands of any other person whose adjusted basis in such land is determined (in whole or in part) by reference to the adjusted basis of such land in the hands of such person.
- (d) **Special rules—** Under regulations prescribed by the Secretary, rules similar to the rules applicable under [section 1245](/usc/26/1245.md) shall apply for purposes of [subsection (a)](#a). For purposes of sections [170(e)](/usc/26/170.md?p=e) and [751(c)](/usc/26/751.md?p=c), amounts treated as ordinary income under [subsection (a)](#a) shall be treated in the same manner as amounts treated as ordinary income under section 1245.

## Source credit

(Added Pub. L. 99–514, title IV, § 403(a), Oct. 22, 1986, 100 Stat. 2222; amended Pub. L. 108–27, title III, § 302(e)(4)(B)(ii), May 28, 2003, 117 Stat. 764; Pub. L. 115–141, div. U, title IV, § 401(a)(177), (178), Mar. 23, 2018, 132 Stat. 1192.)

## Notes

### Editorial Notes

### Amendments

2018—Subsec. (c)(1). Pub. L. 115–141, § 401(a)(177), substituted “section 1201(a)(7)” for “section 1201(4)” and “16 U.S.C. 3801(7)” for “16 U.S.C. 3801(4)” in introductory provisions.

Subsec. (c)(2). Pub. L. 115–141, § 401(a)(178), substituted “section 1201(a)(10)” for “section 1201(6)” and “16 U.S.C. 3801(10)” for “16 U.S.C. 3801(6)”.

2003—Subsec. (d). Pub. L. 108–27 struck out “, 341(e)(12),” after “170(e)”.

### Statutory Notes and Related Subsidiaries

### Effective Date of 2003 Amendment

Amendment by Pub. L. 108–27 applicable, except as otherwise provided, to taxable years beginning after Dec. 31, 2002, see section 302(f) of Pub. L. 108–27, set out as an Effective and Termination Dates of 2003 Amendment note under section 1 of this title.

### Effective Date

Pub. L. 99–514, title IV, § 403(c), Oct. 22, 1986, 100 Stat. 2222, provided that: “The amendments made by this section [enacting this section] shall apply to dispositions of converted wetland or highly erodible cropland (as defined in section 1257(c) of the Internal Revenue Code of 1986 as added by this section) first used for farming after March 1, 1986, in taxable years ending after that date.”