[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 892 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 892

To amend the Internal Revenue Code of 1986 to exclude from gross income 
 gain on the sale or exchange of certain farmland the use of which is 
              restricted in perpetuity to use as farmland.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 6, 2001

  Mr. Pitts 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 exclude from gross income 
 gain on the sale or exchange of certain farmland the use of which is 
              restricted in perpetuity to use as farmland.

    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 ``Open Space Preservation Act of 
2001''.

SEC. 2. EXCLUSION OF GAIN FROM SALE OF CERTAIN FARMLAND.

    (a) General Rule.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically excluded 
from gross income) is amended by redesignating section 139 as section 
139A and by inserting after section 138 the following new section:

``SEC. 139. SALES AND EXCHANGES OF CERTAIN FARMLAND WHICH BY COVENANT 
              IS RESTRICTED TO USE AS FARMLAND.

    ``(a) General Rule.--In the case of an operator of qualified 
farmland, gross income does not include gain from the sale or exchange 
of qualified farmland if there is in effect on the date of such sale or 
exchange a qualified farmland conservation easement.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Qualified farmland.--The term `qualified farmland' 
        means any real property--
                    ``(A) which is located in the United States,
                    ``(B) which is used as a farm for farming purposes 
                (within the meaning of section 2032A(e)), and
                    ``(C) which is located in a county which has a 
                population of 100 or more persons per square mile.
            ``(2) Qualified farmland conservation easement.--The term 
        `qualified farmland conservation easement' means a restriction 
        (granted in perpetuity) which does not permit any use of the 
        land for any purpose other than use as a farm for farming 
        purposes (within the meaning of section 2032A(e)).
    ``(c) Verification of Easement.--Subsection (a) shall not apply by 
reason of any qualified farmland conservation easement unless the 
taxpayer--
            ``(1) notifies (in such form and manner as the Secretary 
        may by regulations prescribe) both the Secretary and the 
        Secretary of Agriculture of the political subdivision of the 
        State in which such easement is recorded, and
            ``(2) submits to the Secretary a copy of such easement.''
    (b) Clerical Amendment.--The table of sections for such part is 
amended by striking the last item and inserting the following new 
items:

                              ``Sec. 139. Sales and exchanges of 
                                        certain farmland which by 
                                        covenant is restricted to use 
                                        as farmland.
                              ``Sec. 139A. Cross references to other 
                                        Acts.''
    (c) Effective Date.--The amendments made by this section shall 
apply to restrictions first recorded after December 31, 2001, and to 
sales and exchanges after such date.
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