[Congressional Record Volume 143, Number 56 (Monday, May 5, 1997)]
[Senate]
[Pages S3963-S3964]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. D'AMATO:
  S. 693. A bill to amend the Internal Revenue Code of 1986 to provide 
that the value of qualified historic property shall not be included in 
determining the taxable estate of a decedent; to the Committee on 
Finance.


                THE ESTATE TAX HISTORY PRESERVATION ACT

 Mr. D'AMATO. Mr. President, I introduce legislation that will 
provide a new tax incentive for qualifying owners of national historic 
landmark houses that will encourage the preservation and public 
accessibility to these houses. It is designed to prevent private owners 
of historical properties from being forced to sell because of concern 
over the financial burden of Federal estate taxes.
  Under current law, the value of historical property is included in 
determining the taxable estate of a decedent. This raises serious 
concerns to families that are maintaining and opening to the public 
these architectural historical homes. They are sharing these treasures 
with our Nation. To force the operation of these privately funded 
museum properties to end, due to fear over future estate tax burdens 
that will be thrust on their descendants is depriving our citizens the 
opportunity to enjoy the architectural wonders of these homes. Tourists 
in many States will be denied the opportunity to visit these homes and 
experience the heritage of these historical sites.
  Mr. President, I propose that an estate tax exemption be provided for 
qualified historical properties. The number of historical homes that 
will qualify is modest since this legislation requires private, taxable 
ownership and national historical landmark status, as well as a 
willingness on the part of the owner to operate the premises as a 
museum subject to strict requirements. While the legislation has 
minimal effects on Federal revenues it plays a major role in preserving 
extraordinarily important properties.
  This bill is an opportunity for the Government to encourage 
preservation of history. Historical homes help preserve the themes of 
our common heritage and highlight the unique pattern of each community. 
They contribute to the perpetuation of the historical fabric of our 
national life. They are a source of a community's pride in 
accomplishment and beauty.
  Section 1(b)(7) of the National Historic Preservation Act of 1966 
states that:

       Although the major burdens of historic preservation have 
     been borne and major efforts initiated by private agencies 
     and individuals, and both should continue to play a vital 
     role, it is nevertheless necessary and appropriate for the 
     Federal Government to accelerate its historic preservation 
     programs and activities to get maximum encouragement to 
     agencies and individuals undertaking preservation by private 
     means, and to assist State and local governments and the 
     National Trust Historic Preservation in the United States to 
     expand and accelerate their historical preservation programs 
     and activities.

  That is what this legislation does. It encourages private citizens to 
preserve historical properties rather than sell or develop them despite 
their desire to do so. Winston Churchill recognized the importance of 
preserving historical properties when in 1943 he said ``We shape our 
buildings, and afterwards our buildings shape us''.
  Mr President, I urge my colleagues on both sides of the aisle to join 
me in cosponsoring this important legislation.
  Mr. President, I ask unanimous consent that the complete text of the 
bill be placed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 693

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

     SECTION 1. EXCLUSION FROM ESTATE TAX FOR HISTORIC PROPERTY 
                   SUBJECT TO PRESERVATION EASEMENT.

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

     ``SEC. 2057. QUALIFIED HISTORIC PROPERTY.

       ``(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 value of any qualified historic property 
     included in the gross estate.
       ``(b) Definitions.--For purposes of this section--
       ``(1) Qualified historic property.--
       ``(A) In general.--The term `qualified historic property' 
     means any historic property if--
       ``(i) on or before the date on which the return of the tax 
     imposed by section 2001 is filed, a qualified real property 
     interest described in section 170(h)(2)(C) in such property 
     is held by a qualified organization for the purpose described 
     in section 170(h)(4)(A)(iv), and
       ``(ii) such property is covered by an agreement meeting the 
     requirements of subsection (c) which is entered into on or 
     before such date.
       ``(B) Treatment of personal property.--Such term includes 
     personal property included within, or associated with, 
     qualified historic property (as defined in paragraph (1)) if 
     such personal property--
       ``(i) is held by the decedent holding such qualified 
     historic property,
       ``(ii) has been so included within, or associated with, 
     such qualified historic property throughout the 10-year 
     period ending on the date of the decedent's death, and
       ``(iii) is covered by the agreement referred to in 
     subparagraph (A)(ii) which covers such qualified historic 
     property.
       ``(2) Historic property.--The term `historic property' 
     means--
       ``(A) any building (and its structural components)--
       ``(i) which is designated as a National Historic Landmark 
     under section 101 of the National Historic Preservation Act 
     throughout the 10-year period ending on the date of the 
     decedent's death,
       ``(ii) which was owned by the decedent or a member of the 
     decedent's family (as defined in section 2032A(e)(2)) 
     throughout such 10-year period, and
       ``(iii) which was originally used for residential purposes, 
     and
       ``(B) any other real property to the extent reasonably 
     necessary for public view and visitation of the property 
     described in subparagraph (A).

[[Page S3964]]

       ``(3) Qualified organization.--The term `qualified 
     organization' has the meaning given to such term by section 
     170(h)(3).
       ``(4) Treatment of qualified historic property held by a 
     corporation.--In the case of a corporation all of the stock 
     in which was held on the date of the decedent's death by the 
     decedent or members of the decedent's family (as defined in 
     section 2032A(e)(2))--
       ``(A) stock in such corporation shall be treated for 
     purposes of this section as qualified historic property to 
     the extent that the value of such stock is attributable to 
     qualified historic property held by such corporation, but
       ``(B) the requirements of subsection (c) shall be met only 
     if each member of the decedent's family holding such stock on 
     such date sign the agreement referred to in subsection (c).
       ``(c) Requirements for Agreement.--
       ``(1) In general.--For purposes of subsection 
     (b)(1)(A)(ii), an agreement meets the requirements of this 
     subsection if--
       ``(A) such agreement is a written agreement signed by each 
     person in being who has an interest (whether or not in 
     possession) in the historic property (other than the 
     qualified organization),
       ``(B) such agreement is entered into with a State historic 
     preservation agency (or similar State agency) and filed with 
     the Secretary with the return of the tax imposed by section 
     2001,
       ``(C) such agreement provides that the only activities 
     carried on at the historic property are activities which are 
     substantially related (aside from the need for income or 
     funds or the use made of the profits derived) to--
       ``(i) the public view and visitation of such property and 
     the property described in the last sentence of subsection 
     (b)(1) with respect to such property), and
       ``(ii) the maintenance and preservation of such property 
     and surrounding areas for such public view and visitation,
       ``(D) such agreement provides that the historic property 
     will be open to the public for a period of at least 20 years 
     beginning on the date on which the return of the tax imposed 
     by section 2001 is filed, and
       ``(E) such agreement provides that any admission fees (if 
     any) shall bear a reasonable relationship to admission fees 
     for other comparable tourist sites and shall be approved by 
     such State historic preservation agency (or similar State 
     agency).
       ``(2) Treatment of food, lodging, and meeting facilities 
     provided to general public.--The regular carrying on--
       ``(A) a trade or business of providing lodging shall be 
     treated as not substantially related for purposes of 
     paragraph (1)(C),
       ``(B) a trade or business of providing food shall be 
     treated as not substantially related for purposes of 
     paragraph (1)(C) unless--
       ``(i) such food is only provided to individuals who pay the 
     generally applicable admission fees (if any) for admission to 
     the property by individuals to whom no food is provided, and
       ``(ii) only an insubstantial portion of the structures on 
     the historic property is devoted to the provision of such 
     food, and
       ``(C) a trade or business of providing facilities for 
     meetings or events shall be treated as not substantially 
     related for purposes of paragraph (1)(C) unless all of the 
     net proceeds from such trade or business are used for 
     maintenance or preservation of the historic property.
       ``(3) Open to the public.--For the purposes of paragraph 
     (1)(D), the 20-year period referred to in such paragraph 
     shall be suspended during reasonable periods of renovation.
       ``(d) Tax Treatment of Dispositions and Failure to Comply 
     With Agreement.--
       ``(1) Imposition of additional estate tax.--If, during the 
     20-year period referred to in subsection (c)(1)(D)--
       ``(A) any person signing the written agreement referred to 
     in subsection (c) disposes of any interest in the qualified 
     historic property, or
       ``(B) there is a violation of any provision of such 
     agreement (as determined under regulations prescribed by the 
     Secretary), then there is hereby imposed an additional estate 
     tax.
       ``(2) Exception for certain transferees who agree to be 
     bound by agreement.--No tax shall be imposed under paragraph 
     (1) by reason of any disposition if the person acquiring the 
     property--
       ``(A) is a qualified organization or is a member of the 
     family (as defined in section 2032A(e)(2)) of the person 
     disposing of such property, and
       ``(B) agrees to be bound by the agreement referred to in 
     subsection (b)(4) and to be liable for any tax under this 
     subsection in the same manner as the person disposing of such 
     property.
       ``(3) Amount of additional tax.--
       ``(A) In general.--The amount of the additional tax imposed 
     by paragraph (1) with respect to any property shall be an 
     amount equal to the applicable percentage of the excess of--
       ``(i) what would (but for subsection (a)) have been the tax 
     imposed by section 2001 (reduced by the credits allowable), 
     over
       ``(ii) the tax imposed by section 2001 (as so reduced).
       ``(B) Applicable percentage.--For purposes of subparagraph 
     (A), the applicable percentage is the percentage determined 
     in accordance with the following table for the year (of 20-
     year period referred to in subsection (c)(1)(D)) in which the 
     event described in paragraph (1) occurs:

    ``If the event                                       The applicable
    occurs during:                                       percentage is:
    The 1st 12 years of such 20-year period..............100 percent   
    The 13th or 14th year of such period..................80 percent   
    The 15th or 16th year of such period..................60 percent   
    The 17th or 18th year of such period..................40 percent   
    The 19th or 20th year of such period..................20 percent.  

       ``(4) Due date.--The additional tax imposed by this 
     subsection shall be due and payable on the day which is 6 
     months after the date of the disposition or violation 
     referred to in paragraph (1).
       ``(5) Liability for tax.--Any person signing the agreement 
     referred to in subsection (c) (other than the executor) shall 
     be personally liable for the additional tax imposed by this 
     subsection. If more than 1 person is liable under this 
     subsection, all such persons shall be jointly and severally 
     liable.
       ``(6) Certain other rules to apply.--Rules similar to the 
     rules of sections 1016(c), 2013(f), and 2032A(f) shall apply 
     for purposes of this subsection.
       ``(e) Other Special Rules.--
       ``(1) Coordination with deduction for transfer of 
     easement.--Section 2055(f) shall not apply to any interest 
     referred to therein with respect to property for which a 
     deduction is allowed under subsection (a).
       ``(2) Denial of deduction of indebtedness on excluded 
     property.--No deduction shall be allowed under section 2053 
     for indebtedness in respect of property the value of which is 
     deducted under subsection (a).
       ``(3) Submission of annual inventories of personal 
     property.--The Secretary shall require the submission to the 
     Secretary of such inventories of personal property which is 
     qualified historic property as the Secretary determines are 
     necessary for purposes of this section.''
       (b) Technical Amendments.--
       (1) Subsection (a) of section 1014 of such Code is amended 
     by striking the period at the end of paragraph (3) and 
     inserting ``, or'' and by adding after paragraph (3) the 
     following new paragraph:
       ``(4) in the case of property the value of which was 
     deducted under section 2057(a), the adjusted basis of such 
     property in the hands of the decedent immediately before the 
     death of the decedent.''
       (2) Subparagraph (A) of section 2056A(b)(10) of such Code 
     is amended by inserting ``2057,'' after ``2056,''.
       (3) The table of sections for part IV of subchapter A of 
     chapter 11 of such Code is amended by adding at the end the 
     following new item:

``Sec. 2057. Qualified historic property.''

       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to the estates of decedents dying 
     after the date of the enactment of this Act.
                                 ______