2: Determination of taxable profits

I.-Capital gains realised on exchanges of agricultural land, carried out as part of a rural land development scheme within the meaning of article L. 121-1 of the Code rural et de la pêche maritime by sociétés d'aménagement foncier et d'établissement rural and sociétés whose principal activity is agricultural, within the meaning of article 63 of this Code, which are liable for corporation tax may, on option, be the subject of a deferral of taxation until one of the events mentioned in II of this article.

The asset(s) given or received in exchange for the farmland may also be shares in companies whose main activity is agricultural within the meaning of Article 63 or whose main purpose is agricultural property.

In the event of an exchange with a balance, the shares will be taxed on a deferred basis until one of the events mentioned in II of this article. In the event of an exchange with a balance, the capital gain realised is included in the profits for the financial year in which the exchange takes place, up to the amount of the balance received.

In the event of an exchange of land for land, the capital gain realised is included in the profits for the financial year in which the exchange takes place. In the case of an exchange of land for company shares, the capital gain realised, after deduction of any balancing payment, on the sale of the shares is included in the profit for the financial year in which the exchange takes place in proportion to the value on the day of the exchange of the company's assets other than agricultural land out of the total assets of the company whose shares are exchanged.

II. II -The deferral of taxation referred to in I is terminated:

1° In the event of the sale of the land received in exchange;

2° In the event of disposal of the shares or units received in exchange or in the event of disposal of the land included in the assets of the company involved in the exchange on the day of the exchange;

In the event of partial disposal of the items included in the assets of the company involved in the exchange. In the event of a partial disposal of the items mentioned in 1° or 2°, the capital gain carried forward is taxable in proportion to the assets disposed of.