To amend the Internal Revenue Code of 1986 to provide a deduction for a portion of the fiscal year 1996 transitional payment under the Agricultural Market Transition Act which is deposited into a reserve against future farm losses.

Amends the Internal Revenue Code to allow, at the election of the taxpayer, a deduction for the taxable year in which the taxpayer receives the first-year agricultural market transition payment equal to the amount paid by the taxpayer during such taxable year to the Agricultural Market Transition Reserve of the taxpayer. Limits the amount which may be paid into the Reserve. Makes amounts distributed includible in gross income.