To amend the Internal Revenue Code of 1986 to provide an exclusion from the gross estate for certain farmlands and lands subject to qualified conservation easements, and for other purposes.

Summary: Family Farm Preservation and Conservation Estate Tax Act - Amends the Internal Revenue Code to: (1) exclude from the gross estate the value of property used by a decedent and the decedent's family as a farm for farming purposes and certain qualified conservation easements; and (2) impose a recapture tax if such farmland is sold outside the decedent's family or is no longer used for farming purposes or if a qualified conservation easement is likewise sold or used in violation of the terms of such easement.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Family Farm Preservation and 
Conservation Estate Tax Act''.

SEC. 2. EXCLUSION FROM GROSS ESTATE FOR CERTAIN FARMLAND SO LONG AS 
              FARMLAND USE CONTINUES.

    (a) In General.--Part III of subchapter A of chapter 11 of the 
Internal Revenue Code of 1986 (relating to gross estate) is amended by 
inserting after section 2033 the following new section:

``SEC. 2033A. EXCLUSION OF CERTAIN FARMLAND SO LONG AS USE AS FARMLAND 
              CONTINUES.

    ``(a) In General.--In the case of an estate of a decedent to which 
this section applies, if the executor makes the election described in 
subsection (f), the value of the gross estate shall not include the 
adjusted value of qualified farmland 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) during the 8-year period ending on the date of the 
        decedent's death there have been periods aggregating 5 years or 
        more during which--
                    ``(A) the qualified farmland was owned by the 
                decedent or a member of the decedent's family, and
                    ``(B) there was material participation (within the 
                meaning of section 2032A(e)(6)) by the decedent or a 
                member of the decedent's family in the operation of 
                such farmland, except that `material participation' 
                shall also include any rental of real estate and 
                related property between the estate of the decedent or 
                any successor thereto and any tenant so long as the 
                tenant uses the real estate and related property to 
                produce agricultural or horticultural commodities, 
                including but not limited to livestock, bees, poultry, 
                orchards and woodlands, timber and fur-bearing animals 
                and wildlife on such farmland.
        Rules similar to the rules of paragraphs (4) and (5) of section 
        2032A(b) shall apply for purposes of subparagraph (B).
    ``(c) Definitions and Special Rule.--For purposes of this section--
            ``(1) Qualified farmland.--The term `qualified farmland' 
        means any real property or other property related to the farm 
        operation--
                    ``(A) which is located in the United States,
                    ``(B) which is used as a farm for farming purposes, 
                and
                    ``(C) which was acquired from or passed from the 
                decedent to a qualified heir of the decedent and which, 
                on the date of the decedent's death, was being so used 
                by the decedent or a member of the decedent's family.
            ``(2) Member of family.--A member of a family, with respect 
        to any individual, means--
                    ``(A) a member of the family (as defined by section 
                2031A(e)(2)), and
                    ``(B) includes--
                            ``(i) a lineal descendant of any spouse 
                        described in subparagraph (D) of section 
                        2032A(e)(2),
                            ``(ii) a lineal descendant of a sibling of 
                        a parent of such individual,
                            ``(iii) a spouse of any lineal descendant 
                        described in clause (ii), and
                            ``(iv) a lineal descendant of a spouses 
                        described in clause (iii).
            ``(3) Adjusted value.--The term `adjusted value' means the 
        value of farmland for purposes of this chapter (determined 
        without regard to this section), reduced by the amount 
        deductible under paragraph (3) or (4) of section 2053(a).
            ``(4) Other terms.--Any other term used in this section 
        which is also used in section 2032A shall have the same meaning 
        given such term by section 2032A.
    ``(d) Tax Treatment of Dispositions and Failures To Use for Farming 
Purposes.--
            ``(1) Imposition of recapture tax.--If, at any time after 
        the decedent's death--
                    ``(A) the qualified heir disposes of any interest 
                in qualified farmland (other than by a disposition to a 
                member of his family), or
                    ``(B) the qualified heir ceases to use the real 
                property which was acquired (or passed) from the 
                decedent as a farm for farming purposes,
        then there is hereby imposed a recapture tax on such 
        disposition or cessation of use.
            ``(2) Amount of recapture tax.--The amount of the tax 
        imposed by paragraph (1) shall be the excess of--
                    ``(A) the tax which would have been imposed by 
                section 2001 on the estate of the decedent but 
                determined as if such estate included the interest in 
                qualified farmland described in paragraph (1) which was 
                so disposed of or ceased to be so used, reduced by the 
                credits allowable against such tax, over
                    ``(B) the tax imposed by section 2001 on the estate 
                of the decedent, reduced by such credits.
        For purposes of this paragraph, the value of the interest in 
        qualified farmland specified in subparagraph (A) shall be the 
        adjusted value of such interest as of the date of the 
        disposition or cessation of such interest described in 
        paragraph (1).
            ``(3) Regulations.--The Secretary may prescribe such 
        regulations as may be necessary or appropriate to carry out 
        this subsection, including regulations requiring record keeping 
        and information reporting, except that the Secretary may not 
        impose a lien on the estate of the decedent or qualified 
        farmland for such purposes.
    ``(e) Application of Other Rules.--Rules similar to the rules of 
subsections (e) (other than paragraph (13) thereof), (f), (g), (h), and 
(i) of section 2032A shall apply for purposes of this section.
    ``(f) Election.--The election under this subsection shall be made 
on or before the due date (including extensions) for filing the return 
of tax imposed by section 2001 and shall be made on such return.''.
    (b) Clerical Amendment.--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. 2033A.  Exclusion of certain farmland so long as use as farmland 
                            continues.''.
    (c) 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. TEMPORARY EXCLUSION OF QUALIFIED CONSERVATION EASEMENTS.

    (a) In General.--Part III of subchapter A of chapter 11 of the 
Internal Revenue Code of 1986 (relating to gross estate), as amended by 
section 2, is amended by inserting after section 2033A the following 
new section:

``SEC. 2033B. TEMPORARY EXCLUSION OF QUALIFIED CONSERVATION EASEMENTS.

    ``(a) In General.--In the case of an estate of a decedent to which 
this section applies, if the executor makes the election described in 
subsection (d)--
            ``(1) the value of the gross estate shall not include the 
        value of land subject to a qualified conservation easement 
        included in the estate, but
            ``(2) a tax under subsection (b) shall apply.
    ``(b) Tax Treatment of Dispositions and for Use Incompatible With 
Conservation Easement.--
            ``(1) Imposition of recapture tax.--If, at any time after 
        the decedent's death--
                    ``(A) the qualified heir disposes of any interest 
                in the land described in subsection (a)(1) (other than 
                by a disposition to a member of his family), or
                    ``(B) the qualified heir uses any portion of the 
                land described in subsection (a)(1) in a manner which 
                violates the terms of such easement,
        then there is hereby imposed a recapture tax on such 
        disposition or use.
            ``(2) Amount of recapture tax.--The amount of the tax 
        imposed by paragraph (1) shall be the excess of--
                    ``(A) the tax which would have been imposed by 
                section 2001 on the estate of the decedent, determined 
                as if--
                            ``(i) section 2031(c) did not apply, and
                            ``(ii) as if such estate included the 
                        interest described in paragraph (1)(A) or the 
                        portion described in paragraph (1)(B), as 
                        applicable,
                reduced by the credits allowable against such tax, over
                    ``(B) the tax imposed by section 2001 on the estate 
                of the decedent, reduced by such credits.
        For purposes of this paragraph, the value of any interest in 
        land or portion of land subject to a qualified conservation 
        easement shall be the fair market value of such interest or 
        portion as of the date of the disposition or use of such 
        interest or portion described in paragraph (1).
            ``(3) Regulations.--The Secretary may prescribe such 
        regulations as may be necessary or appropriate to carry out 
        this subsection, including regulations requiring record keeping 
        and information reporting, except that the Secretary may not 
        impose a lien on the estate of the decedent, land subject to a 
        qualified conservation easement, or qualified conservation 
        easement for such purposes.
    ``(c) Land Subject to Qualified Conservation Easement.--For 
purposes of this section, the terms `land subject to a qualified 
conservation easement' and `qualified conservation easement' have the 
meanings given such terms by section 2031(c)(8).
    ``(d) Election.--The election under this subsection shall be made 
on or before the due date (including extensions) for filing the return 
of tax imposed by section 2001 and shall be made on such return.''.
    (b) Clerical Amendment.--The table of sections for subchapter B of 
chapter 62 of such Code is amended by adding at the end the following 
new item:

``Sec. 2033B.  Temporary exclusion of qualified conservation 
                            easements.''.
    (c) 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. 4. MODIFICATION OF DEFINITION OF QUALIFIED CONSERVATION EASEMENT.

    (a) In General.--Subparagraph (B) of section 2031(c)(8) of the 
Internal Revenue Code of 1986 is amended by striking ``and the 
restriction on the use of such interest described in section 
170(h)(2)(C) shall include a prohibition on more than a de minimis use 
for a commercial recreational activity''.
    (b) 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. 5. MODIFICATION OF RULES RELATING TO VALUATION OF CERTAIN FARM, 
              ETC., REAL PROPERTY.

    (a) Disposition of Interest Subject to Qualified Conservation 
Easement.--Subparagraph (A) of section 2032A(c)(1) of the Internal 
Revenue Code of 1986 is amended by striking ``family)'' and inserting 
``family or by a disposition to any other person when such interest in 
real property is subject to a qualified conservation easement (as 
defined in section 2031(c)(8)(B)))''.
    (b) Woodlands Subject to Management Plan.--Paragraph (2) of section 
2032A(c) of such Code 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 that is made pursuant to--
                            ``(i) a written forest management plan 
                        developed by a credentialed professional 
                        forester,
                            ``(ii) a written forest management plan 
                        that is equivalent to a forest stewardship 
                        plan, or
                            ``(iii) a third-party audited forest 
                        certification system or similar land management 
                        protocol.''.
    (c) Sale of Conservation Easement Not a Disposition.--Paragraph (8) 
of section 2032A(c) of such Code is amended--
            (1) by striking ``A qualified'' and inserting ``Neither a 
        qualified'', and
            (2) by inserting ``nor a sale of a conservation easement 
        limiting the use of qualified real property'' after 
        ``otherwise''.
    (d) Farm Defined.--Paragraph (4) of section 2032A(e) of such Code 
is amended by striking ``orchards and woodlands'' and inserting 
``orchards, woodlands, and properties managed to provide habitat in 
support of fish and wildlife dependent recreation''.
    (e) Farming Purpose Defined.--Paragraph (5) of section 2032A(e) of 
such Code is amended--
            (1) in subparagraph (A) by inserting ``, silvicultural,'' 
        after ``agricultural'', and
            (2) by striking ``and'' at the end of subparagraph (B), by 
        striking the period at the end of subparagraph (C) and 
        inserting ``, and'', and by adding at the end the following:
                    ``(D) creating, restoring, enhancing, or 
                maintaining habitat for the purpose of generating 
                revenue from nature-oriented recreational 
                opportunities, including hunting, fishing, wildlife 
                observation, and related fish and wildlife dependent 
                recreation.''.
    (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.