A bill to amend the Internal Revenue Code of 1954 with respect to the tax treatment of agricultural commodities received under a payment-in-kind program.

Amends the Internal Revenue Code to provide that for taxpayers who receive agricultural commodities under a Federal payment-in-kind program: (1) no income shall be treated as realized by receipt of such commodities; but (2) any gain realized from the sale or exchange of such commodities shall be included in gross income and shall be treated as ordinary income.

Treats such commodities as commodities produced on acreage diverted from agricultural use for purposes of the estate tax valuation of farm property.