Rural Land Conservation Act of 1993

Summary: Rural Land Conservation Act of 1993 - Amends the Internal Revenue Code to exclude from the gross estate tax the value of land subject to a qualified conservation easement (less the amount of any indebtedness secured by such land).  Includes in the gross estate tax the value of each development right retained by the donor in the conveyance of the easement.  Makes such tax due upon the disposition of the property.  Provides that such land subject to the exclusion will have a carryover basis for purposes of determining gain or loss. 
Excludes from the gift tax transfers by gift of land subject to a conservation easement.  Imposes an additional gift tax on the disposal of such land if the donor retains any development right. 
Removes the allowance for a tax deduction in the case of a contribution of property where mining rights are retained if the surface estate and mining interests were separated before June 13, 1976, and remain separated. 
Declares that for purposes of the alternative estate valuation method:  (1) a qualified conservation contribution is not a disposition; and (2) land subject to a conservation easement is not disqualified.

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Rural Land 
Conservation Act of 1993''.
    (b) Amendment of 1986 Code.--Except as otherwise provided, whenever 
in this Act an amendment or repeal is expressed in terms of an 
amendment to, or repeal of, a section or provision, the reference shall 
be considered to be made to a section or other provision of the 
Internal Revenue Code of 1986.

SEC. 2. ESTATE TAX TREATMENT OF LAND SUBJECT TO A QUALIFIED 
              CONSERVATION EASEMENT.

    (a) Estate Tax With Respect to Land Subject to a Qualified 
Conservation Easement.--Section 2031 of the Internal Revenue Code of 
1986 (relating to the definition of gross estate) is amended by 
redesignating subsection (c) as subsection (d) and by inserting after 
subsection (b) the following new subsection:
    ``(c) Estate Tax With Respect to Land Subject to a Qualified 
Conservation Easement.--
            ``(1) In general.--If the executor makes the election 
        described in paragraph (4) of this subsection, then, except as 
        otherwise provided in this subsection, there shall be excluded 
        from the gross estate the value of land subject to a qualified 
        conservation easement (reduced by the amount of any 
        indebtedness to which such land is subject).
            ``(2) Land subject to a qualified conservation easement.--
        For purposes of this subsection--
                    ``(A) In general.--The term `land subject to a 
                qualified conservation easement' means land which--
                            ``(i) is located in or within 50 miles of 
                        an area which, on the date of the decedent's 
                        death, is--
                                    ``(I) a metropolitan area (as 
                                defined by the Office of Management and 
                                Budget), or
                                    ``(II) a national park, unless it 
                                is determined by the Secretary that 
                                land in or within 50 miles of the park 
                                is not under significant development 
                                pressure,
                            ``(ii) which was owned by the decedent or a 
                        member of the decedent's family at all times 
                        during the 3-year period ending on the date of 
                        the decedent's death, and
                            ``(iii) with respect to which a qualified 
                        conservation contribution (as defined in 
                        section 170(h)(1)) of a qualified real property 
                        interest described in section 170(h)(2)(C) is 
                        (or has been made) by the decedent or a member 
                        of the decedent's family.
                    ``(B) Certain contributions not included.--For 
                purposes of subparagraph (A), section 170(h)(4)(A) 
                shall be applied without regard to clause (iv) thereof 
                in determining whether there is a qualified 
                conservation contribution.
                    ``(C) Family member.--For purposes of subparagraph 
                (A), the term `member of the decedent's family' has the 
                same meaning given such term by section 2032A(e)(2).
            ``(3) Tax on disposition if land subject to retained 
        development right.--
                    ``(A) In general.--If the donor retained any 
                development right when the qualified conservation 
                contribution described in paragraph (2)(A)(iii) was 
                made, there is hereby imposed an additional estate tax 
                on the first person disposing (other than by gift or 
                devise) of the property after the death of the 
                decedent.
                    ``(B) Amount of additional tax.--
                            ``(i) In general.--The amount of the 
                        additional tax imposed by subparagraph (A) 
                        shall be the amount equal to the increase in 
                        estate tax liability which would have occurred 
                        if the value of the development right had been 
                        included in the gross estate of the decedent 
                        (as determined under paragraph (4)).
                            ``(ii) Partial disposition.--If only a 
                        portion of the property is disposed of, the 
                        person disposing of the property shall pay a 
                        pro rata portion of the tax imposed by 
                        subparagraph (A) (and such tax shall be reduced 
                        with respect to subsequent dispositions by the 
                        taxes imposed with respect to prior 
                        dispositions).
                            ``(iii) Time for payment of tax.--Any tax 
                        imposed under subparagraph (A) shall be due and 
                        payable by the person disposing of the property 
                        no later than April 15 of the calendar year 
                        following the calendar year in which the 
                        disposition occurs.
                    ``(C) Development right.--For purposes of this 
                paragraph, the term `development right' means the 
                right--
                            ``(i) to establish or use any structure 
                        (and the land immediately surrounding it) for 
                        sale, rent, or other commercial purpose which 
                        is not subordinate to and directly supportive 
                        of the conservation purpose of the qualified 
                        conservation contribution described in 
                        paragraph (2)(A)(iii), or
                            ``(ii) to conduct the activity of farming, 
                        forestry, ranching, horticulture, viticulture, 
                        or recreation, whether or not for profit, on 
                        the land.
            ``(4) Election with respect to land subject to qualified 
        conservation easement.--The election under this subsection 
        shall be made on the return of the tax imposed by section 2001 
        and shall be made in such manner as the Secretary shall by 
        regulations prescribe. Such an election, once made, shall be 
        irrevocable.
            ``(5) Calculation and notice of potential estate tax due.--
                    ``(A) In general.--An executor making the election 
                described in paragraph (4) of this subsection shall 
                compute the amount of the additional estate tax 
                described in paragraph (3)(B).
                    ``(B) Notice.--The executor shall file a `Notice of 
                Potential Estate Tax Due' in the place or places where 
                deeds are put to public record for the locality in 
                which the land subject to the qualified conservation 
                easement is located.
                    ``(C) Form and manner.--The computation and filing 
                required by this paragraph shall be done in such manner 
                and on such forms as the Secretary may prescribe.''.
    (b) Carryover Basis.--Section 1014(a) of the Internal Revenue Code 
of 1986 (relating to basis of property acquired from a decedent) is 
amended by striking the period at the end of paragraph (3) and 
inserting ``, or'' at the end thereof, and by inserting at the end the 
following new paragraph:
            ``(4) in the case of property excluded from the gross 
        estate of the decedent under section 2031(c), the basis of the 
        property in the hands of the decedent.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying after December 31, 1992, which 
includes land subject to qualified conservation easements granted after 
December 31, 1992.

SEC. 3. GIFT TAX ON LAND SUBJECT TO A QUALIFIED CONSERVATION EASEMENT.

    (a) Gift Tax With Respect to Land Subject to a Qualified 
Conservation Easement.--Section 2503 of the Internal Revenue Code of 
1986 (relating to taxable gifts) is amended by adding at the end the 
following new subsection:
    ``(h) Gift Tax With Respect to Land Subject to a Qualified 
Conservation Easement.--
            ``(1) In general.--At the election of the donor, the 
        transfer by gift of land subject to a qualified conservation 
        easement shall not be treated as a transfer of property by gift 
        for purposes of this chapter. For purposes of this subsection, 
        the term `land subject to a qualified conservation easement' 
        shall have the same meaning as in section 2031(c), except that 
        any reference to `decedent' or `the date of the decedent's 
        death' shall refer to the donor and the date of the transfer by 
        the donor, respectively.''
            ``(2) Land subject to retained development rights.--
                    ``(A) In general.--If the donor retains any 
                development right when the gift is made, then there is 
                hereby imposed an additional gift tax on the first 
                person disposing (other than by gift or device) of the 
                property after the date of the gift to which this 
                subsection applies.
                    ``(B) Amount of tax.--The amount of the tax under 
                subparagraph (A) shall be equal to the increase in gift 
                tax liability which would have occurred if the value of 
                the development right had been treated as a gift.
                    ``(C) Definition and rules.--For purposes of this 
                paragraph--
                            ``(i) Development right.--The term 
                        `development right' has the meaning given such 
                        term by section 2031(c)(3)(C).
                            ``(ii) Other rules.--The rules of clauses 
                        (ii) and (iii) of paragraph (3)(B) and 
                        paragraph (5) of section 2031(c) shall apply, 
                        except that `donor' shall be substituted for 
                        `executor' each place it appears.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to gifts of land subject to qualified conservation easements 
granted after December 31, 1992.

SEC. 4. QUALIFIED CONSERVATION CONTRIBUTION WHERE SURFACE AND MINERAL 
              RIGHTS ARE SEPARATED.

    (a) In General.--Section 170(h)(5)(B)(ii) of the Internal Revenue 
Code of 1986 (relating to special rule) is amended to read as follows:
                            ``(ii) Special rule.--With respect to any 
                        contribution of property in which the ownership 
                        of the surface estate and mineral interests has 
                        been and remains separated, subparagraph (A) 
                        shall be treated as met if the probability of 
                        surface mining occurring on such property is so 
                        remote as to be negligible.''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to contributions made after December 31, 1992, in taxable 
years ending after such date.

SEC. 5. QUALIFIED CONSERVATION CONTRIBUTION IS NOT A DISPOSITION.

    (a) Qualified Conservation Contribution Is Not a Disposition.--
Subsection (c) of section 2032A of the Internal Revenue Code of 1986 
(relating to alternative valuation method) is amended by adding at the 
end thereof the following new paragraph:
            ``(8) Qualified conservation contribution is not a 
        disposition.--A qualified conservation contribution (as defined 
        in section 170(h)) by gift or otherwise shall not be treated as 
        a disposition for purposes of this subsection. If qualified 
        real property is land subject to a qualified conservation 
        easement (as defined in section 2031(c)), this subsection shall 
        not apply to such property.''.
    (b) Land Subject to a Qualified Conservation Easement Is Not 
Disqualified.--Subsection (b) of section 2032A of the Internal Revenue 
Code of 1986 (relating to alternative valuation method) is amended by 
adding at the end the following paragraph:
            ``(6) Qualified conservation easement.--Property shall not 
        fail to be treated as qualified real property solely because it 
        is land subject to a qualified conservation easement (as 
        defined in section 2031(c)).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying after December 31, 1992, which 
include land subject to qualified conservation easements granted after 
December 31, 1992.