[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 864 Introduced in House (IH)]







104th CONGRESS
  1st Session
                                H. R. 864

 To amend the Internal Revenue Code of 1986 to provide an election to 
 exclude from the gross estate of a decedent the value of certain land 
  subject to a qualified conservation easement, and to make technical 
                changes to alternative valuation rules.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 8, 1995

   Mr. Houghton (for himself, Mr. Payne of Virginia, Mrs. Johnson of 
   Connecticut, Mr. McCrery, Mr. Coyne, Mr. Brewster, Mr. Weldon of 
Pennsylvania, and Mr. English of Pennsylvania) introduced the following 
      bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide an election to 
 exclude from the gross estate of a decedent the value of certain land 
  subject to a qualified conservation easement, and to make technical 
                changes to alternative valuation rules.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``American Farm Protection Act of 
1995''.

SEC. 2. TREATMENT OF LAND SUBJECT TO A QUALIFIED CONSERVATION EASEMENT.

    (a) Estate Tax With Respect to Land Subject to a Qualified 
Conservation Easement.--Section 2031 of the Internal Revenue Code of 
1986 (relating to the definition of gross estate) is amended by 
redesignating subsection (c) as subsection (d) and by inserting after 
subsection (b) the following new subsection:
    ``(c) Estate Tax With Respect to Land Subject to a Qualified 
Conservation Easement.--
            ``(1) In general.--If the executor makes the election 
        described in paragraph (3), then, except as otherwise provided 
        in this subsection, there shall be excluded from the gross 
        estate the value of land subject to a qualified conservation 
        easement (reduced by the amount of any indebtedness to which 
        such land is subject).
            ``(2) Treatment of Retained Development Right.--
                    ``(A) In general.--Paragraph (1) shall not apply to 
                the value of any development right retained by the 
                donor in the conveyance of a qualified conservation 
                easement. The tax imposed by section 2001 (if any) 
                attributable to any development right so retained shall 
                be imposed only upon the disposition of such property. 
                The tax so imposed shall be due and payable by the 
                person so disposing of such property on the 15th day of 
                the 4th month following the calendar year in which such 
                disposition occurs.
                    ``(B) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Disposition.--The term `disposition' 
                        shall not include any gift or devise.
                            ``(ii) Development right.--The term 
                        `development right' means the right to 
                        establish or use any structure and the land 
                        immediately surrounding it for sale, rent, or 
                        any other commercial purpose which is not 
                        subordinate to and directly supportive of--
                                    ``(I) the conservation purpose 
                                identified in the easement, or
                                    ``(II) the activity of farming, 
                                forestry, ranching, horticulture, 
                                viticulture, or recreation (whether or 
                                not for profit) conducted on land 
                                subject to the easement in which such 
                                right is retained.
            ``(3) Election.--The election under this subsection shall 
        be made on the return of the tax imposed by section 2001. Such 
        an election, once made, shall be irrevocable.
            ``(4) Calculation and notice of potential estate tax due.--
        An executor making the election described in paragraph (3) 
        shall compute the amount of tax imposed by section 2001 upon 
        any development right (as defined in paragraph (2)) retained by 
        the donor in the conveyance of such qualified conservation 
        easement and include such computation with the return of the 
        tax imposed by section 2001. The executor shall also file a 
        `Notice of Potential Estate Tax Due' in the place or places 
        where deeds are put to public record for the locality in which 
        the land subject to such qualified conservation easement is 
        located. The report of the computation of tax on any retained 
        development right and the filing of the notice prescribed in 
        this paragraph shall be done in such manner and on such forms 
        as the Secretary shall prescribe.
            ``(5) Definitions.--For purposes of this subsection--
                    ``(A) Land subject to a qualified conservation 
                easement.--The term `land subject to a qualified 
                conservation easement' means land--
                            ``(i) which is located in or within 50 
                        miles of an area which, on the date of the 
                        decedent's death, is--
                                    ``(I) a metropolitan area (as 
                                defined by the Office of Management and 
                                Budget), or
                                    ``(II) a National Park (unless it 
                                is determined by the Secretary that 
                                land in or within 50 miles of such a 
                                Park is not under significant 
                                development pressure),
                            ``(ii) which was owned by the decedent or a 
                        member of the decedent's family at all times 
                        during the 3-year period ending on the date of 
                        the decedent's death, and
                            ``(iii) with respect to which a qualified 
                        conservation easement is or has been made by 
                        the decedent or a member of the decedent's 
                        family.
                    ``(B) Qualified conservation easement.--The term 
                `qualified conservation easement' means a qualified 
                conservation contribution (as defined in section 
                170(h)(1)) of a qualified real property interest (as 
                defined in section 170(h)(2)(C)). Clause (iv) of 
                section 170(h)(4)(A) shall not apply for purposes of 
                the preceding sentence.
                    ``(C) Member of family.--The term `member of the 
                decedent's family' means any member of the family (as 
                defined in section 2032A(e)(2)) of the decedent.''
    (b) Carryover Basis.--Section 1014(a) of such Code (relating to 
basis of property acquired from a decedent) is amended by striking the 
period at the end of paragraph (3) and inserting ``, or'' and by adding 
after paragraph (3) the following new paragraph:
            ``(4) to the extent of the applicability of the exclusion 
        described in section 2031(c), the basis in the hands of the 
        decedent.''
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying after December 31, 1994.

SEC. 3. GIFT TAX ON LAND SUBJECT TO A QUALIFIED CONSERVATION EASEMENT.

    (a) Gift Tax With Respect to Land Subject to a Qualified 
Conservation Easement.--Section 2503 of the Internal Revenue Code of 
1986 (relating to taxable gifts) is amended by adding at the end the 
following new subsection:
    ``(h) Gift Tax With Respect to Land Subject to a Qualified 
Conservation Easement.--The transfer by gift of land subject to a 
qualified conservation easement shall not be treated as a transfer of 
property by gift for purposes of this chapter. For purposes of this 
subsection, the term `land subject to a qualified conservation 
easement' has the meaning given to such term by section 2031(c); except 
that references to the decedent shall be treated as references to the 
donor and references to the date of the decedent's death shall be 
treated as references to the date of the transfer by the donor.''
    (b) Effective Date.--The amendment made by this section shall apply 
to gifts made after December 31, 1994.

SEC. 4. QUALIFIED CONSERVATION CONTRIBUTION IS NOT A DISPOSITION.

    (a) Qualified Conservation Contribution Is Not a Disposition.--
Subsection (c) of section 2032A of the Internal Revenue Code of 1986 
(relating to alternative valuation method) is amended by adding at the 
end the following new paragraphs:
            ``(8) Qualified conservation contribution is not a 
        disposition.--A qualified conservation contribution (as defined 
        in section 170(h)) by gift or otherwise shall not be deemed a 
        disposition under subsection (c)(1)(A).
            ``(9) Exception for real property is land subject to a 
        qualified conservation easement.--If qualified real property is 
        land subject to a qualified conservation easement (as defined 
        in section 2031(c)), the preceding paragraphs of this 
        subsection shall not apply.''
    (b) Land Subject to a Qualified Conservation Easement Is Not 
Disqualified.--Subsection (b) of section 2032A of such Code (relating 
to alternative valuation method) is amended by adding at the end the 
following paragraph:
                    ``(E) If property is otherwise qualified real 
                property, the fact that it is land subject to a 
                qualified conservation easement (as defined in section 
                2031(c)) shall not disqualify it under this section.''
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to contributions made, and easements granted, after 
December 31, 1994.
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