[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1593 Introduced in House (IH)]

112th CONGRESS
  1st Session
                                H. R. 1593

   To amend the Internal Revenue Code of 1986 to allow an unlimited 
    exclusion from transfer taxes for certain farmland and land of 
              conservation value, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 15, 2011

   Mr. Bishop of New York (for himself and Mr. Hanna) 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 allow an unlimited 
    exclusion from transfer taxes for certain farmland and land of 
              conservation value, 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.

    This Act may be cited as the ``Farmland Preservation and Land 
Conservation Act of 2011''.

SEC. 2. TRANSFER TAX EXCLUSION FOR CERTAIN FARMLAND AND LAND OF 
              CONSERVATION VALUE.

    (a) Estate Tax.--
            (1) In general.--Part IV of subchapter A of chapter 11 of 
        the Internal Revenue Code of 1986 (relating to gross estate) is 
        amended by inserting after section 2058 the following new 
        section:

``SEC. 2059. FARM AND CONSERVATION LAND.

    ``(a) In General.--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 
the qualified farm or conservation land included in the estate.
    ``(b) Estates to Which Section Applies.--This section shall apply 
to an estate if--
            ``(1) the decedent was (at the date of the decedent's 
        death) a citizen or resident of the United States, and
            ``(2) the executor elects the application of this section 
        and files the agreement referred to in subsection (d)(2) with 
        respect to the qualified farm or conservation land.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified farm or conservation land.--The term 
        `qualified farm or conservation land' means any real property--
                    ``(A) which is located in the United States,
                    ``(B) which, on the date of the decedent's death, 
                was being used--
                            ``(i) as a farm for farming purposes 
                        (within the meaning of section 2032A(e)), or
                            ``(ii) exclusively for conservation 
                        purposes (within the meaning of section 
                        170(h)),
                    ``(C) with respect to which there is a recorded 
                covenant which prevents any use of such land which is 
                inconsistent with the uses described in subparagraph 
                (B), and
                    ``(D) which is designated in the agreement referred 
                to in subsection (d)(2).
            ``(2) Adjusted value.--The term `adjusted value' means the 
        value of the qualified farm or conservation land for purposes 
        of this chapter, reduced by the amount allowable as a deduction 
        under paragraph (4) of section 2053(a).
    ``(d) Election; Agreement.--
            ``(1) Election.--The election under this section shall be 
        made on the return of the tax imposed by section 2001. Such 
        election shall be made in such manner as the Secretary shall by 
        regulations prescribe. Such an election, once made, shall be 
        irrevocable.
            ``(2) Agreement.--The agreement referred to in this 
        paragraph is a written agreement signed by each person in being 
        who has an interest (whether or not in possession) in any 
        property designated in such agreement consenting to the 
        application of subsection (e) with respect to such property.
            ``(3) Modification of election and agreement permitted.--
        The procedures prescribed under section 2032A(d)(3) shall apply 
        for purposes of this subsection.
    ``(e) Tax Treatment of Dispositions and Inconsistent Uses.--In the 
case of a decedent's estate which includes qualified farm or 
conservation land with respect to which there is a covenant described 
in subsection (c)(1)(C) (including such a covenant made by a prior 
decedent)--
            ``(1) Imposition of additional estate tax.--If, at any time 
        after the decedent's death and before the death of the heir--
                    ``(A) the heir disposes of any interest (other than 
                by a qualified conservation contribution (as defined in 
                section 170(h))) in qualified farm or conservation land 
                and the person acquiring such interest is not subject 
                to the covenant described in subsection (c)(1)(C), or
                    ``(B) the heir uses such land in any manner which 
                violates the terms of such covenant,
        then, there is hereby imposed an additional estate tax.
            ``(2) Amount of additional tax.--
                    ``(A) In general.--The amount of the additional tax 
                imposed by paragraph (1) with respect to any interest 
                shall be the amount equal to the sum of--
                            ``(i) the adjusted tax difference with 
                        respect to the estate, and
                            ``(ii) interest at the underpayment rate 
                        established under section 6621 on the amount 
                        determined under clause (i) for the period 
                        beginning on the due date for filing the estate 
                        tax return.
                    ``(B) Adjusted tax difference with respect to 
                estate.--For purposes of this subsection, the term 
                `adjusted tax difference with respect to the estate' 
                means the excess of--
                            ``(i) what would have been the estate tax 
                        liability if the fair market value of the 
                        interest at the time of the disposition or use 
                        described in paragraph (1), over
                            ``(ii) the estate tax liability.
                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.
            ``(3) Certain additional rules to apply.--Rules similar to 
        the rules of paragraphs (2)(D), (2)(E), (3), (4), (5), and (8) 
        of section 2032A(c) shall apply for purposes of this 
        subsection.
            ``(4) Income tax treatment of dispositions.--For purposes 
        of chapter 1, in any case in which an additional tax is imposed 
        by this subsection by reason of any disposition or use of an 
        interest, such interest (if not otherwise disposed of in a 
        transaction in which gain is recognized) shall be treated as 
        sold at its fair market value at the time of the disposition or 
        use, and gain shall be recognized notwithstanding any provision 
        of subtitle A.
    ``(f) Basis.--For purposes of this title, the basis of any 
qualified farm or conservation land which is included in the estate of 
a decedent pursuant to subsection (a) shall be the adjusted basis of 
such qualified farm or conservation land on the date of the decedent's 
death.
    ``(g) Certain Additional Rules To Apply.--For purposes of this 
section, rules similar to the following rules shall apply:
            ``(1) Certain real property included.--Section 2032A(e)(3).
            ``(2) Definitions of farm and farming purposes.--Paragraphs 
        (4) and (5) of section 2032A(e).
            ``(3) Property acquired from decedent.--Section 
        2032A(e)(9).
            ``(4) Community property.--Section 2032A(e)(10).
            ``(5) Bond in lieu of personal liability.--Section 
        2032A(e)(11).
            ``(6) Special rule for woodlands.--Section 2032A(e)(13).
            ``(7) Statute of limitation.--Section 2032A(f).
            ``(8) Special rules for involuntary conversions of real 
        property.--Section 2032A(h).
            ``(9) Exchanges of qualified real property.--Section 
        2032A(i).
    ``(h) Cross Reference.--See section 6324C for special lien on farm 
and conservation land.''.
            (2) Special lien for farm and conservation land.--Part II 
        of subchapter C of chapter 64 of such Code (relating to liens) 
        is amended by inserting after section 6324B the following new 
        section:

``SEC. 6324C. SPECIAL LIEN ON FARM AND CONSERVATION LAND.

    ``(a) General Rule.--In the case of qualified farm or conservation 
land (within the meaning of section 2059(c)(1)) with respect to which 
an election is in effect under section 2059(b)(2) or section 2524(a) or 
pursuant to section 2611(b)(2), an amount equal to the adjusted value 
attributable to such land (within the meaning of section 2059(c)(2)) 
shall be a lien in favor of the United States on such land.
    ``(b) Period of Lien.--The lien imposed by this section shall arise 
at the time an election is filed under section 2059 and shall continue 
with respect to such qualified farm or conservation land until the 
earlier of--
            ``(1) such land is transferred to a qualified organization 
        (as defined in section 170(h)(3)),
            ``(2) the liability for tax under subsection (e) of section 
        2059 with respect to such land has been satisfied or has become 
        unenforceable by reason of lapse of time, or
            ``(3) it is established to the satisfaction of the 
        Secretary that no further tax liability may arise under section 
        2059(e) with respect to such land.
    ``(c) Certain Rules and Definitions Made Applicable.--
            ``(1) In general.--The rule set forth in paragraphs (1), 
        (3), and (4) of section 6324A(d) shall apply with respect to 
        the lien imposed by this section as if it were a lien imposed 
        by section 6324A.
            ``(2) Qualified farm or conservation land.--For purposes of 
        this section, the term `qualified farm or conservation land' 
        includes qualified replacement property (within the meaning of 
        section 2032A(h)(3)(B)) and qualified exchange property (within 
        the meaning of section 2032A(i)(3)).
    ``(d) Substitution of Security for Lien.--To the extent provided in 
regulations prescribed by the Secretary, the furnishing of security may 
be substituted for the lien imposed by this section.''.
    (b) Conforming and Clerical Amendments.--
            (1) Section 1016(a) of such Code is amended by striking 
        ``and'' at the end of paragraph (36), by striking the period at 
        the end of paragraph (37) and inserting ``, and'', and by 
        inserting after paragraph (37) the following new paragraph:
            ``(38) to the extent provided in section 2059(f).''.
            (2) The table of sections for part III of subchapter A of 
        chapter 11 of such Code is amended by inserting after the item 
        relating to section 2033 the following new item:

``Sec. 2059. Farm and conservation land.''.
            (3) The table of sections for part II of subchapter C of 
        chapter 64 of such Code is amended by inserting after the item 
        relating to section 6324B the following new item:

``Sec. 6324C. Special lien on farm and conservation land.''.
    (c) Gift Tax.--
            (1) In general.--Subchapter C of chapter 12 of subtitle B 
        of such Code (deductions) is amended by redesignating section 
        2524 as section 2525 and inserting after section 2523 the 
        following new section:

``SEC. 2524. GIFT OF FARM AND CONSERVATION LAND.

    ``(a) In General.--In computing taxable gifts for the calendar 
year, there shall be allowed as a deduction in the case of a citizen or 
resident the adjusted value of all gifts made during such year which 
are qualified farm or conservation land if the donee elects the 
application of this section and files the agreement referred to in 
subsection (c)(2) with respect to the qualified farm or conservation 
land.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Qualified farm or conservation land.--The term 
        `qualified farm or conservation land' means any real property--
                    ``(A) which is located in the United States,
                    ``(B) which, on the date of the gift, was being 
                used--
                            ``(i) as a farm for farming purposes 
                        (within the meaning of section 2032A(e)), or
                            ``(ii) exclusively for conservation 
                        purposes (within the meaning of section 
                        170(h)),
                    ``(C) with respect to which there is a recorded 
                covenant which prevents any use of such land which is 
                inconsistent with the uses described in subparagraph 
                (B), and
                    ``(D) which is designated in the agreement referred 
                to in subsection (c)(2).
            ``(2) Adjusted value.--The term `adjusted value' means the 
        value of the qualified farm or conservation land for purposes 
        of this chapter, reduced by the amount allowable as a deduction 
        under paragraph (4) of section 2053(a).
    ``(c) Election; Agreement.--
            ``(1) Election.--The election under this section shall be 
        made in such manner as the Secretary shall by regulations 
        prescribe. Such an election, once made, shall be irrevocable.
            ``(2) Agreement.--The agreement referred to in this 
        paragraph is a written agreement signed by each person in being 
        who has an interest (whether or not in possession) in any 
        property designated in such agreement consenting to the 
        application of subsection (d) with respect to such property.
            ``(3) Modification of election and agreement permitted.--
        The procedures prescribed under section 2032A(d)(3) shall apply 
        for purposes of this subsection.
    ``(d) Tax Treatment of Dispositions and Inconsistent Uses.--In the 
case of a decedent's estate which includes qualified farm or 
conservation land with respect to which there is a covenant described 
in subsection (c)(1)(C) (including such a covenant made by a prior 
decedent)--
            ``(1) Imposition of additional gift tax.--If, at any time 
        after the gift described in subsection (a) and before the death 
        of the donee--
                    ``(A) the donee disposes of any interest (other 
                than by a qualified conservation contribution (as 
                defined in section 170(h))) in qualified farm or 
                conservation land and the person acquiring such 
                interest is not subject to the covenant described in 
                subsection (b)(1)(C), or
                    ``(B) the donee uses such land in any manner which 
                violates the terms of such covenant,
        then, there is hereby imposed an additional gift tax.
            ``(2) Amount of additional tax.--
                    ``(A) In general.--The amount of the additional tax 
                imposed by paragraph (1) with respect to any interest 
                shall be the amount equal to the sum of--
                            ``(i) the adjusted tax difference with 
                        respect to the gift, and
                            ``(ii) interest at the underpayment rate 
                        established under section 6621 on the amount 
                        determined under clause (i) for the period 
                        beginning on the date of such gift.
                    ``(B) Adjusted tax difference with respect to 
                gift.--For purposes of this subsection, the term 
                `adjusted tax difference with respect to the gift' 
                means the excess of--
                            ``(i) what would have been the gift tax 
                        liability if the fair market value of the 
                        interest at the time of the disposition or use 
                        described in paragraph (1), over
                            ``(ii) the gift tax liability.
                For purposes of this subparagraph, the term `gift tax 
                liability' means the tax imposed by section 2501 
                reduced by the credits allowable against such tax.
            ``(3) Certain additional rules to apply.--Rules similar to 
        the rules of paragraphs (2)(D), (2)(E), (3), (4), (5), and (8) 
        of section 2032A(c) shall apply for purposes of this 
        subsection.
            ``(4) Income tax treatment of dispositions.--For purposes 
        of chapter 1, in any case in which an additional tax is imposed 
        by this subsection by reason of any disposition or use of an 
        interest, such interest (if not otherwise disposed of in a 
        transaction in which gain is recognized) shall be treated as 
        sold at its fair market value at the time of the disposition or 
        use, and gain shall be recognized notwithstanding any provision 
        of subtitle A.
    ``(e) Certain Additional Rules To Apply.--For purposes of this 
section, rules similar to the following rules shall apply:
            ``(1) Certain real property included.--Section 2032A(e)(3).
            ``(2) Definitions of farm and farming purposes.--Paragraphs 
        (4) and (5) of section 2032A(e).
            ``(3) Bond in lieu of personal liability.--Section 
        2032A(e)(11).
            ``(4) Special rule for woodlands.--Section 2032A(e)(12).
            ``(5) Statute of limitation.--Section 2032A(f).
            ``(6) Special rules for involuntary conversions of real 
        property.--Section 2032A(h).
            ``(7) Exchanges of qualified real property.--Section 
        2032A(i).
    ``(f) Cross Reference.--See section 6324C for special lien on farm 
and conservation land.''.
            (2) Conforming amendment.--Section 2525 of such Code, as 
        amended by paragraph (1), is amended by striking ``sections 
        2522 and 2523'' and inserting ``sections 2522, 2523, and 
        2524''.
            (3) Clerical amendment.--The table of sections for such 
        subchapter is amended by striking the last item and inserting 
        the following new items:

``Sec. 2524. Gift of farm and conservation land.
``Sec. 2525. Extent of deductions.''.
    (d) Generation Skipping Tax.--
            (1) Exclusion.--Subsection (b) of section 2611 of such Code 
        (relating to certain transfers excluded) is amended by 
        redesignating paragraph (2) as paragraph (3) and by inserting 
        after paragraph (1) the following new paragraph:
            ``(2) any transfer which, if made inter vivos by an 
        individual, would be treated as a deduction under section 2524 
        (relating to gift of farm and conservation land), or''.
            (2) Applicable rules.--Subsection (b) of section 2611 of 
        such Code is amended by adding at the end the following flush 
        sentence:
``For purposes of paragraph (2), rules similar to the rules of section 
2524 shall apply.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying, gifts made, and generation-
skipping transfers after December 31, 2010.
                                 <all>