Farm Credit Relief Act of 1985

Farm Credit Relief Act of 1985 - Amends the Federal Deposit Insurance Act to permit the Federal Deposit Insurance Corporation to authorize an agricultural bank to take any of the following actions (provided that there is no evidence of fraud or gross mismanagement by bank management and that such action will enable the bank to remain viable and show a net profit): (1) file financial reports in accordance with regulatory accounting practices and use push down or purchase method accounting principles; (2) reappraise its real and personal property and credit any increase between fair market value and the book value of the property to capital accounts; (3) renegotiate and reamortize (on an amortization schedule not to exceed 30 years) certain qualified problem loans and charge off the difference between the principal of and accrued interest on such loans and the beginning principal balance of the renegotiated loans over a 30-year period; (4) mark to market the value of certain real estate or other real or personal property and charge off any loss recognized over a 30-year period; (5) write off expenses related to the ownership of such real estate or other property over a 20-year period; and (6) mark to market and sell certain securities held in its investment portfolio and charge off any loss recognized over a 30-year period. Conditions the bank's eligibility to take such actions on maintenance of the January 1, 1985 percentage of agricultural loans in its loan portfolio.

Amends the Internal Revenue Code to declare that a net operating loss for any taxable year beginning after December 31, 1984, with respect to any loan or security subject to this Act shall be a net operating loss carryover to each of the 30 taxable years following the taxable year of such loss.