FARMER Act of 2013

Summary: Farmers and Ranchers Minimizing Estate Regulations Act of 2013 or the FARMER Act of 2013 - Amends the Internal Revenue Code, with respect to the special use valuation of farms and other property used in a trade or business for estate tax purposes, to: (1) increase to $2 million the allowable reduction in the fair market value of such property for valuation purposes, (2) reduce the required holding period for such property for eligibility and recapture purposes, (3) allow rentals of such property by controlled entities to qualify as a special use, (4) repeal the requirement to use the gross cash rental method for valuing such property, and (5) exempt woodlands subject to a management plan from the additional tax for early dispositions of such property and for failure to comply with special use requirements. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Farmers and Ranchers Minimizing 
Estate Regulations Act of 2013'' or the ``FARMER Act of 2013''.

SEC. 2. MODIFICATIONS TO ALTERNATE VALUATION OF FARM, ETC., REAL 
              PROPERTY.

    (a) Maximum Reduction Increased to $2,000,000.--
            (1) In general.--Paragraph (2) of section 2032A(a) of the 
        Internal Revenue Code of 1986 (relating to limitation on 
        aggregate reduction in fair market value) is amended by 
        striking ``$750,000'' and inserting ``$2,000,000''.
            (2) Conforming amendment.--The first sentence of section 
        2032A(a)(3) of such Code is amended to read as follows: ``In 
        the case of estates of decedents dying in a calendar year after 
        2012, the $2,000,000 amount contained in paragraph (2) shall be 
        increased by an amount equal to--
                    ``(A) $2,000,000, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for such calendar year by 
                substituting `calendar year 2011' for `calendar year 
                1992' in subparagraph (B) thereof.''.
    (b) Reduction in Required Holding and Use Periods of Decedent.--
Subparagraph (C) of section 2032A(b)(1) of such Code is amended--
            (1) by striking ``8-year period'' and inserting ``5-year 
        period'', and
            (2) by striking ``5 years'' and inserting ``3 years''.
    (c) Reduction in Required Holding and Use Periods To Avoid 
Recapture.--
            (1) In general.--Paragraph (1) of section 2032A(c) of such 
        Code is amended--
                    (A) by striking ``10 years'' and inserting ``5 
                years'', and
                    (B) by striking subparagraph (B) and inserting the 
                following new subparagraph:
                    ``(B) there have been periods aggregating 3 years 
                or more during which the qualified heir does not use 
                for the qualified use the qualified real property which 
                was acquired (or passed) from the decedent,''.
            (2) Conforming amendment.--Clause (ii) of section 
        2032A(c)(7)(A) of such Code is amended by striking ``10-year'' 
        and inserting ``5-year''.
    (d) Certain Rents From Controlled Entities Treated as Qualified.--
Subparagraph (E) of section 2032A(c)(7) of such Code is amended by 
inserting ``(or to an entity more than 50 percent (by vote and value) 
of the equity interests in which are owned directly by members of such 
family)'' after ``descendant''.
    (e) Repeal of Use of Gross Cash Rental of Comparable Land in 
Valuing Farms.--
            (1) In general.--Subparagraphs (A) and (B) of section 
        2032A(e)(7) of such Code (relating to method of valuing farms) 
        are amended to read as follows:
                    ``(A) In general.--The value of a farm for farming 
                purposes shall be determined by dividing--
                            ``(i) the excess of the average annual net 
                        share rental for comparable land used for 
                        farming purposes and located in the locality of 
                        such farm over the average annual State and 
                        local real estate taxes for such comparable 
                        land, by
                            ``(ii) the average annual effective 
                        interest rate for all new Federal Land Bank 
                        loans.
                For purposes of the preceding sentence, the average 
                annual net share rental computation shall be made on 
                the basis of the 5 most recent calendar years ending 
                before the date of the decedent's death.
                    ``(B) Net share rental.--For purposes of this 
                paragraph, the term `net share rental' means the excess 
                of--
                            ``(i) the value of the produce received by 
                        the lessor of the land on which such produce is 
                        grown, over
                            ``(ii) the cash operating expenses of 
                        growing such produce which, under the lease, 
                        are paid by the lessor.''.
            (2) Conforming amendment.--Subparagraph (C) of section 
        2032A(e)(7) of such Code is amended by striking ``that there is 
        no comparable land from which the average annual gross cash 
        rental may be determined, and''.
    (f) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying after the date of the enactment of 
this Act.

SEC. 3. WOODLANDS SUBJECT TO MANAGEMENT PLAN.

    (a) In General.--Paragraph (2) of section 2032A(c) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(F) Exception for woodlands subject to management 
                plan.--Subparagraph (E) shall not apply to any 
                disposition or severance of standing timber on a 
                qualified woodland if the harvest is--
                            ``(i) consistent with a written forest 
                        management plan developed under the Cooperative 
                        Forestry Assistance Act of 1978 (16 U.S.C. 
                        2103a), or an equivalent plan approved by the 
                        State Forester,
                            ``(ii) conducted under the guidance of a 
                        qualified forestry professional (as determined 
                        by the Secretary in consultation with the 
                        United States Forest Service), or
                            ``(iii) conducted on lands certified to a 
                        third-party audited forest certification system 
                        or similar land management protocol, as 
                        determined by the United States Forest 
                        Service.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to the disposition or severance of standing timber after the date 
of the enactment of this Act.