[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 901 Introduced in Senate (IS)]







105th CONGRESS
  1st Session
                                 S. 901

    To provide Federal tax incentives to owners of environmentally 
sensitive lands to enter into conservation easements for the protection 
   of habitat; to amend the Internal Revenue Code of 1986 to allow a 
deduction from the gross estate of a decedent in an amount equal to the 
 value of real property subject to an endangered species conservation 
                   agreement; and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 12, 1997

Mr. Kempthorne introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
    To provide Federal tax incentives to owners of environmentally 
sensitive lands to enter into conservation easements for the protection 
   of habitat; to amend the Internal Revenue Code of 1986 to allow a 
deduction from the gross estate of a decedent in an amount equal to the 
 value of real property subject to an endangered species conservation 
                   agreement; and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Endangered Species 
Habitat Protection Act of 1997''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Enhanced deduction for the denotation of a conservation 
                            easement.
Sec. 4. Exclusion from estate for real property subject to endangered 
                            species conservation agreement.
Sec. 5. Income tax incentives to preserve land to protect endangered 
                            species.

SEC. 2. FINDINGS.

    The Senate finds and declares the following:
            (1) The majority of American property owners recognize the 
        importance of protecting the environment, including the habitat 
        upon which endangered and threatened species depend.
            (2) Current Federal tax laws discourage placement of 
        privately held lands into endangered and threatened species 
        conservation agreements.
            (3) The Federal Government should assist landowners in the 
        goal of conserving endangered and threatened species and their 
        habitat.
            (4) If the environment is to be protected and preserved, 
        existing Federal tax laws must be modified or changed to 
        provide tax incentives to landowners to attain the goal of 
        conservation of endangered and threatened species and the 
        habitats they depend upon.

SEC. 3. ENHANCED DEDUCTION FOR THE DONATION OF A CONSERVATION EASEMENT.

    (a) In General.--Subparagraph (A) of section 170(h)(4) of the 
Internal Revenue Code of 1986 (defining conservation purpose) is 
amended by striking ``or'' at the end of clause (iii), by striking the 
period at the end of clause (iv) and inserting ``, or'', and by adding 
at the end the following new clause:
            ``(v) the protection of a designated as endangered or 
        threatened species, species proposed for listing and candidate 
        species by the Secretary of the Interior or the Secretary of 
        Commerce.''
    (b) Enhanced Valuation.--Section 170(h) of the Internal Revenue 
Code of 1986 (defining qualified conservation contribution) is amended 
by adding at the end the following new paragraph:
            ``(7) Enhanced valuation of property with endangered 
        species and other species.--For purposes of this section, the 
        valuation of a perpetual restriction granted to the Secretary 
        of the Interior or the Secretary of Commerce or to a State 
        agency implementing an endangered species program for the 
        purpose described in paragraph (4)(A)(iii) shall be made by 
        comparing the value of the property after the restriction is 
        granted with the value of that same property without either the 
        encumbrance of such restriction or any of the restrictions 
        placed on such property by the Endangered Species Act of 1973 
        (16 U.S.C. 1531 et seq.).''
    (c) Effective Date.--The amendments made by this section shall 
apply to contributions made after the date of the enactment of this 
Act.

SEC. 4. EXCLUSION FROM ESTATE FOR REAL PROPERTY SUBJECT TO ENDANGERED 
              SPECIES CONSERVATION AGREEMENT.

    (a) In General.--Part IV of subchapter A of chapter 11 of the 
Internal Revenue Code of 1986 (relating to taxable estate) is amended 
by adding at the end the following new section:

``SEC. 2057. CERTAIN REAL PROPERTY SUBJECT TO ENDANGERED SPECIES 
              CONSERVATION AGREEMENT.

    ``(a) General Rule.--For purposes of the tax imposed by section 
2001, the value of the taxable estate shall be determined by deducting 
from the value of the gross estate an amount equal to the adjusted 
value of real property included in the gross estate which is subject to 
an endangered species conservation agreement.
    ``(b) Property Subject to an Endangered Species Conservation 
Agreement.--For purposes of this section--
            ``(1) In general.--Real property shall be treated as 
        subject to an endangered species conservation agreement if--
                    ``(A) each person who has an interest in such 
                property (whether or not in possession) has entered 
                into--
                            ``(i) an endangered species conservation 
                        agreement with respect to such property, and
                            ``(ii) a written agreement with the 
                        Secretary consenting to the application of 
                        subsection (d), and
                    ``(B) the executor of the decedent's estate--
                            ``(i) elects the application of this 
                        section, and
                            ``(ii) files with the Secretary such 
                        endangered species conservation agreement.
            ``(2) Adjusted Value.--The adjusted value of any real 
        property shall be its value for purposes of this chapter, 
        reduced by any amount deductible under section 2053(a)(4) with 
        respect to the property.
    ``(c) Endangered Species Conservation Agreement.--For purposes of 
this section--
            ``(1) In general.--The term `endangered species 
        conservation agreement' means a written agreement entered into 
        with the Secretary of the Interior or the Secretary of 
        Commerce--
                    ``(A) which commits each person who signed such 
                agreement to carry out on the real property activities 
                or practices not otherwise required by law or to 
                refrain from carrying out on such property activities 
                or practices that could otherwise be lawfully carried 
                out,
                    ``(B) which is certified by such Secretary as 
                assisting in the conservation of any species which is--
                            ``(i) designated by such Secretary as an 
                        endangered or threatened species under the 
                        Endangered Species Act of 1973 (16 U.S.C. 1531 
                        et seq.),
                            ``(ii) proposed for such designation, or
                            ``(iii) officially identified by such 
                        Secretary as a candidate for possible future 
                        protection as an endangered or threatened 
                        species.
            ``(2) Annual certification to the secretary by the 
        secretary of the interior or the secretary of commerce of the 
        status of endangered species conservation agreements.--If the 
        executor elects the application of this section, the executor 
        shall promptly give written notice of such election to the 
        Secretary of the Interior or the Secretary of Commerce. The 
        Secretary of the Interior or the Secretary of Commerce shall 
        thereafter annually certify to the Secretary that the 
        endangered species conservation agreement applicable to any 
        property for which such election has been made remains in 
        effect and is being satisfactorily complied with.
    ``(d) Recapture of Tax Benefit in Certain Cases.--
            ``(1) Disposition of interest or material breach.--
                    ``(A) In general.--Except as provided in 
                subparagraph (C), an additional tax in the amount 
                determined under subparagraph (B) shall be imposed on 
                any person on the earlier of--
                            ``(i) the disposition by such person of any 
                        interest in property subject to an endangered 
                        species conservation agreement (other than a 
                        disposition described in subparagraph (C)),
                            ``(ii) the failure by such person to comply 
                        with the terms of the endangered species 
                        conservation agreement, or
                            ``(iii) the termination of the endangered 
                        species conservation agreement.
                    ``(B) Amount of additional tax.--The amount of the 
                additional tax imposed by subparagraph (A) shall be an 
                amount that bears the same ratio of the fair market 
                value of the real property at the time of the event 
                described in subparagraph (A) to the ratio of the 
                amount by which the estate tax liability was reduced by 
                virtue of this section bore to the fair market value of 
                such property at the time the executor filed the 
                agreement under subsection (b)(1). For purposes of this 
                subparagraph, the term `estate tax liability' means the 
                tax imposed by section 2001 reduced by the credits 
                allowable against such tax.
                    ``(C) Exception if transferee assumes obligations 
                of transferor.--Subparagraph (A)(i) shall not apply if 
                the transferor and the transferee of the property enter 
                into a written agreement pursuant to which the 
                transferee agrees--
                            ``(i) to assume the obligations imposed on 
                        the transferor under the endangered species 
                        conservation agreement,
                            ``(ii) to assume personal liability for any 
                        tax imposed under subparagraph (A) with respect 
                        to any future event described in subparagraph 
                        (A), and
                            ``(iii) to notify the Secretary of the 
                        Treasury and the Secretary of the Interior to 
                        the Secretary of Commerce that the transferee 
                        has assumed such obligations and liability. If 
                        a transferee enters into an agreement described 
                        in clauses (i), (ii), and (iii), such 
                        transferee shall be treated as signatory to the 
                        endangered species conservation agreement the 
                        transferor entered into.
            ``(2) Due date of additional tax.--The additional tax 
        imposed by paragraph (1) shall become due and payable on the 
        day that is 6 months after the date of the disposition referred 
        to in paragraph (1)(A)(i) or, in the case of an event described 
        in clause (ii) or (iii) of paragraph (1)(A), on April 15 of the 
        calendar year following any year in which the Secretary of the 
        Interior or the Secretary of Commerce fails to provide the 
        certification required under subsection (c)(2).
    ``(e) Statute of Limitations.--If a taxpayer incurs a tax liability 
pursuant to subsection (d)(1)(A), then--
            ``(1) the statutory period for the assessment of any 
        additional tax imposed by subsection (d)(1)(A) shall not expire 
        before the expiration of 3 years from the date the Secretary is 
        notified (in such manner as the Secretary may by 
regulation prescribe) of the incurring of such tax liability, and
            ``(2) such additional tax may be assessed before the 
        expiration of such 3-year period notwithstanding the provisions 
        of any other law or rule of law that would otherwise prevent 
        such assessment.
    ``(f) Election and Filing of Agreement.--The election under this 
section shall be made on the return of the tax imposed by section 2001. 
Such election, and the filing under subsection (a) of an endangered 
species conservation agreement, shall be made in such manner as the 
Secretary shall by regulation provide.
    ``(g) Application of This Section to Interests in Partnerships, 
Corporations, and Trusts.--The Secretary shall prescribe regulations 
setting forth the application of this section in the case of an 
interest in a partnership, corporation, or trust which, with respect to 
a decedent, is an interest in a closely held business (within the 
meaning of paragraph (1) of section 6166(b)). For purposes of the 
preceding sentence, an interest in a discretionary trust all the 
beneficiaries of which are heirs of the decedent shall be treated as a 
present interest.''
    ``(h) Clerical Amendment.--The table of sections for part IV of 
subchapter A of chapter 11 of the Internal Revenue Code of 1986 is 
amended by adding at the end of the following new item:

                              ``Sec.  2057. Certain real property 
                                        subject to endangered species 
                                        conservation agreement.''
    ``(i) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying after the date of the enactment of 
this Act.

SEC. 5 INCOME TAX INCENTIVES TO PRESERVE LAND TO PROTECT ENDANGERED 
              SPECIES. EXCLUSION OF 75 PERCENT OF GAIN ON SALES OF LAND 
              TO CERTAIN PERSONS FOR THE PROTECTION OF HABITAT.

    (a) In general.--Part I of subchapter P of chapter 1 (relating to 
treatment of capital gains) is amended by adding at the end the 
following new section:

``SEC 1203. 75 PERCENT EXCLUSION FOR GAIN ON SALES OF LAND TO CERTAIN 
              PERSONS FOR THE PROTECTION OF HABITAT.

    ``(a) Exclusion.--Gross income shall not include 75 percent of any 
gain from the sale of any land to a conservation purchaser if--
            ``(1) such land was owned by the taxpayer or a member of 
        the taxpayer's family (as defined in section 2032A(e)(2)) at 
        all times during the 3-year period ending on the date of the 
        sale, and
            ``(2) such land is being acquired by a conservation 
        purchaser for the purpose of protecting the habitat of 
        endangered and threatened species, species proposed for listing 
        and candidate species.
    ``(b) Conservation Purchaser.--For purposes of this section, the 
term `conservation purchaser' means--
            ``(1) any agency of the United States or of any State or 
        local government, and
            ``(2) any qualified organization.
                                 <all>