Encouragement of contributions of capital gain real property made for conservation purposes

(a)

In general

(1)

Individuals

Paragraph (1) of subsection 170(b) of the Internal Revenue Code of 1986 (relating to percentage limitations) is amended by redesignating subparagraphs (E) and (F) as subparagraphs (F) and (G), respectively, and by inserting after subparagraph (D) the following new subparagraph:

(E)

Contributions of qualified conservation contributions

(i)

In general

Any qualified conservation contribution (as defined in subsection (h)(1)) to an organization described in subparagraph (A) shall be allowed to the extent the aggregate of such contributions does not exceed the excess of 50 percent of the taxpayer’s contribution base over the amount of all other charitable contributions allowable under this paragraph. (ii)

Carryover

If the aggregate amount of contributions described in clause (i) exceeds the limitation of clause (i), such excess shall be treated (in a manner consistent with the rules of subsection (d)(1)) as a charitable contribution to which clause (i) applies in each of the 15 succeeding years in order of time. (iii)

Coordination with other subparagraphs

For purposes of applying this subsection and subsection (d)(1), contributions described in clause (i) shall not be treated as described in subparagraph (A), (B), (C), or (D). (iv)

Qualified farmer or rancher

(I)

In general

If the individual is a qualified farmer or rancher for the taxable year in which the contribution is made, clause (i) shall be applied by substituting 100 percent for 50 percent. (II)

Definition

For purposes of subclause (I), the term qualified farmer or rancher means a taxpayer whose gross income from the trade or business of farming (within the meaning of section 2032A(e)(5)) is greater than 50 percent of the taxpayer’s gross income for the taxable year.

(2)

Corporations

Paragraph (2) of section 170(b) of such Code is amended to read as follows:

(2)

Corporations

In the case of a corporation— (A)

In general

The total deductions under subsection (a) for any taxable year (other than for contributions to which subparagraph (B) applies) shall not exceed 10 percent of the taxpayer’s taxable income. (B)

Qualified conservation contributions by certain corporate farmers and ranchers

(i)

In general

Any qualified conservation contribution (as defined in subsection (h)(1)) made— (I)by a corporation which, for the taxable year during which the contribution is made, is a qualified farmer or rancher (as defined in paragraph (1)(E)(iv)(II)) and the stock of which is not readily tradable on an established securities market at any time during such year, and (II)to an organization described in paragraph (1)(A), shall be allowed to the extent the aggregate of such contributions does not exceed the excess of the taxpayer’s taxable income over the amount of charitable contributions allowable under subparagraph (A). (ii)

Carryover

If the aggregate amount of contributions described in clause (i) exceeds the limitation of clause (i), such excess shall be treated (in a manner consistent with the rules of subsection (d)(2)) as a charitable contribution to which clause (i) applies in each of the 15 succeeding years in order of time. (C)

Taxable income

For purposes of this paragraph, taxable income shall be computed without regard to— (i)this section, (ii)part VIII (except section 248), (iii)any net operating loss carrryback to the taxable year under section 172, (iv)section 199, and (v)any capital loss carryback to the taxable year under section 1212(a)(1).

(b)

Conforming amendments

(1)The second sentence of clause (i) of section 170(b)(1)(C) of such Code is amended by striking subparagraph (D) and inserting subparagraph (D) or (E). (2)Clause (i) of section 170(b)(1)(D) of such Code is amended by striking subparagraph (A) and inserting subparagraphs (A) or (E). (3)Paragraph (2) of section 170(d) of such Code is amended by striking subsection (b)(2) each place it appears and inserting subsection (b)(2)(A). (4)Section 545(b)(2) of such Code is amended by striking and (D) and inserting (D), and (E). (c)

Effective date

The amendments made by this section shall apply to contributions made in taxable years beginning after December 31, 2005, and before January 1, 2008.