[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3522 Introduced in House (IH)]







109th CONGRESS
  1st Session
                                H. R. 3522

To amend the Internal Revenue Code of 1986 to clarify that installment 
   sales treatment shall not fail to apply to property acquired for 
  conservation purposes by a State or local government or certain tax-
   exempt organizations merely because purchase funds are held in a 
             sinking or similar fund pursuant to State law.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 28, 2005

     Mr. Bishop of New York (for himself and Mr. Kuhl of New York) 
 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 clarify that installment 
   sales treatment shall not fail to apply to property acquired for 
  conservation purposes by a State or local government or certain tax-
   exempt organizations merely because purchase funds are held in a 
             sinking or similar fund pursuant to State law.

    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 Promotion 
Act of 2005''.

SEC. 2. FINDINGS.

    The Congress finds as follows:
            (1) Land conservation and farmland preservation is an 
        important national goal that allows farmers to continue to farm 
        on their land, and allows communities to protect invaluable 
        natural resources for future generations.
            (2) Farmland in metropolitan and frequently high-cost 
        communities is estimated to account for one-third of all farms, 
        and 18 percent of this nations farmland.
            (3) In many urban fringe areas farmland is rapidly 
        disappearing, and the U.S. Department of Agriculture estimates 
        that approximately 95 million acres of farmland will be taken 
        over by sprawl and urban growth in the coming years.
            (4) Farmers and landowners generally receive a 
        significantly reduced payment for the sale of development 
        rights and conservation easements than they would receive by 
        selling the land to the private sector for development, yet in 
        many instances these sales are treated the same under the tax 
        code.
            (5) In areas where State law requires debt assumed by a 
        municipality to be structured in the form of a sinking fund, 
        farmers and landowners may be discouraged from selling the 
        development rights of their land for conservation purposes. 
        Because sales to State and local governments will be in the 
        form of a sinking fund, a seller may not be able to pay capital 
        gains taxes upfront when the seller will not receive cash 
        payments until a future date.
            (6) In urban fringe areas, many communities have made a 
        concerted effort to purchase development rights to land. The 
        land remains private, but the community gains by preserving 
        open spaces and enjoying environmental benefits. Communities 
        will greatly benefit by the federal government taking steps to 
        assist municipalities in the purchase of development rights.

SEC. 3. USE OF SINKING FUND BY STATE OR LOCAL GOVERNMENT NOT TO PREVENT 
              INSTALLMENT SALES TREATMENT.

    (a) In General.--Paragraph (3) of section 453(f) of the Internal 
Revenue Code of 1986 (relating to payment) is amended to read as 
follows:
            ``(3) Payment.--
                    ``(A) In general.--Except as provided in paragraph 
                (4), the term `payment' does not include the receipt of 
                evidences of indebtedness of the person acquiring the 
                property (whether or not payment of such indebtedness 
                is guaranteed by another person).
                    ``(B) Treatment of sinking and similar funds 
                required by state law.--Nothing in this section or the 
                regulations thereunder shall be construed as treating a 
                seller of property to a qualified organization (as 
                defined in section 170(h)(3)) as receiving a payment by 
                reason of the fact that some or all of the funds for 
                such purchase are made (as required by State law) to a 
                sinking or similar fund if the property is being 
                acquired by such organization exclusively for 
                conservation purposes (as defined in section 
                170(h)(4)).''
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.
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