SECTION 1. ESTATE TAX DEFERRAL IF REAL PROPERTY MANAGED ACCORDING TO 
              HABITAT CONSERVATION AGREEMENT.

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

``SEC. 2057. EXCLUSION OF REAL PROPERTY MANAGED UNDER HABITAT 
              CONSERVATION AGREEMENT.

    ``(a) In General.--If the executor elects the application of this 
section and files the agreement referred to in subsection (b), then 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 the qualified real property of 
the decedent included in determining the gross estate.
    ``(b) Qualified Real Property.--For purposes of this section, the 
term `qualified real property' means real property with respect to 
which each owner has entered into an agreement--
            ``(1) with the Secretary of the Interior or the Secretary 
        of Commerce, under which each owner agrees to maintain the 
        property in accordance with habitat conservation concerns, as 
        determined by the agreement, or
            ``(2) with a State environmental agency, under which each 
        owner agrees to so maintain the property, if the agreement is 
        approved by the Secretary of the Interior or the Secretary of 
        Commerce.
    ``(c) Recapture.--
            ``(1) Disposition of interest, material breach, or 
        termination.--
                    ``(A) In general.--Except as provided in 
                subparagraph (C), if--
                            ``(i) any owner disposes of any interest in 
                        the property to which subsection (a) applies, 
                        or
                            ``(ii) there is a material breach or 
                        termination by any owner of any agreement 
                        described in subsection (b) with respect to 
                        such property,
                then there is hereby imposed an additional tax.
                    ``(B) Amount of tax.--The amount of the tax imposed 
                by subparagraph (A) with respect to any property shall 
                equal the sum of--
                            ``(i) the difference between--
                                    ``(I) the amount of the tax imposed 
                                by section 2001 on the estate of the 
                                decedent, and
                                    ``(II) the amount of tax which 
                                would have been so imposed if the value 
                                of real property excluded under 
                                subsection (a) had been included in the 
                                gross estate at the fair market value 
                                applicable at the time of the 
                                disposition, breach, or termination 
                                referred to in subparagraph (A), and
                            ``(ii) if the disposition, breach, or 
                        termination referred to in subparagraph (A) 
                        occurs during the 2-year period beginning on 
                        the date of the death of the decedent referred 
                        to subsection (a), interest on the amount 
                        described in clause (i), determined using the 
                        underpayment rate established under section 
                        6621, for the period beginning on the due date 
                        of the return of the tax imposed by section 
                        2001 (determined without regard to any 
                        extension) and ending on the date of the 
                        payment of the additional tax under this 
                        paragraph.
                    ``(C) Exception if transferee assumes obligations 
                of transferor.--Subparagraph (A)(i) shall not apply to 
                a disposition by an owner if the owner (or his estate) 
                and the transferee of the property enter into a written 
                agreement under which the transferee agrees--
                            ``(i) to assume the obligations imposed on 
                        the owner under the agreement described in 
                        subsection (b),
                            ``(ii) to assume liability for any tax 
                        imposed under subparagraph (A) with respect to 
                        any future transfers or breaches by such 
                        transferee, and
                            ``(iii) to notify the Secretary of the 
                        Interior or the Secretary of Commerce 
                        (whichever is applicable) and the Secretary 
                        that the transferee has assumed the obligations 
                        and liabilities described in clauses (i) and 
                        (ii).
                If an owner and a transferee enter into an agreement 
                described in clauses (i), (ii), and (iii), such 
                transferee shall be treated for purposes of this 
                section as having entered into an agreement described 
                in subsection (b).
            ``(2) Statute of limitations.--If a taxpayer incurs a tax 
        liability pursuant to paragraph (1), then--
                    ``(A) the statutory period for the assessment of 
                any additional tax imposed by paragraph (1) shall not 
                expire before the expiration of 3 years from the date 
                the Secretary is notified (in such manner as the 
                Secretary may by regulation prescribe) of the incurring 
                of such tax liability, and
                    ``(B) such additional tax may be assessed before 
                the expiration of such 3-year period notwithstanding 
                the provisions of any other law or rule of law that 
                would otherwise prevent such assessment.
    ``(d) Owner.--For purposes of this section, the term `owner' means 
a person in being who has an interest (whether or not in possession) in 
real property.
    ``(e) Election and Filing of 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 
        regulation provide.
            ``(2) Agreement.--The agreement described in subsection (b) 
        shall be filed in such manner as the Secretary shall by 
        regulation prescribe.''
    (b) Clerical Amendment.--The table of sections for part II of 
subchapter A of chapter 11 of such Code is amended by adding at the end 
the following new item:

                              ``Sec. 2017. Credit if real property 
                                        managed under habitat 
                                        conservation agreement.''
    (c) Effective Date.--The amendments made by this Act shall apply to 
the estates of decedents dying after the date of the enactment of this 
Act.

SEC. 2. CREDIT FOR CERTAIN CONSERVATION EXPENSES.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 30A. CREDIT FOR CONSERVATION EXPENSES.

    ``(a) In General.--There shall be allowed as a credit against the 
tax imposed by this chapter for the taxable year an amount equal to the 
applicable conservation expense amount for the taxable year.
    ``(b) Applicable Conservation Expense Amount.--For purposes of this 
section--
            ``(1) In general.--The term `applicable conservation 
        expense amount' means, with respect to qualified conservation 
        expenses paid or incurred by the taxpayer during the taxable 
        year--
                    ``(A) such qualified conservation expenses, if the 
                out-of-pocket expenses of the taxpayer are 50 percent 
                or more of such qualified conservation expenses, or
                    ``(B) the out-of-pocket expenses of the taxpayer, 
                if the out-of-pocket expenses are less than 50 percent 
                of such qualified conservation expenses.
            ``(2) Out-of-pocket expenses.--The term `out-of-pocket 
        expenses' means, with respect to qualified conservation 
        expenses paid or incurred by the taxpayer during the taxable 
        year, the excess of--
                    ``(A) such qualified conservation expenses, over
                    ``(B) the amount of any grant to the taxpayer which 
                is--
                            ``(i) made for the purpose of paying such 
                        qualified conservation expenses, and
                            ``(ii) excludable from income.
    ``(c) Qualified Conservation Expenses.--For purposes of this 
section--
            ``(1) In general.--The term `qualified conservation 
        expenses' means, with respect to any real property, expenses 
        paid or incurred for--
                    ``(A) any action taken pursuant to a qualified 
                conservation agreement for such property, or
                    ``(B) any qualified conservation activity.
            ``(2) Qualified conservation activity.--The term `qualified 
        conservation activity' means any activity so designated for 
        purposes of this paragraph by the Director of the United States 
        Fish and Wildlife Service or the Administrator of the National 
        Marine Fisheries Service.
            ``(3) Qualified conservation agreement.--The term 
        `qualified conservation agreement' means an agreement described 
        in section 2057(b).
    ``(d) Limitation.--The credit allowed under this section for any 
taxable year may not exceed $1,500.
    ``(e) Carryforward or Unused Credit.--If the credit allowable under 
subsection (a) for any taxable year exceeds the limitation imposed by 
section 26(a) for such taxable year reduced by the sum of the credits 
allowable under subpart A and this subpart (other than this section), 
such excess shall be carried to the succeeding taxable year and added 
to the credit allowable under subsection (a) for such succeeding 
taxable year up to 10 years.
    ``(f) Denial of Double Benefit.--No deduction may be allowed under 
this chapter for any expense for which a credit is allowed under this 
section.
    (b) Clerical Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end the following new item:

                              ``Sec. 30A. Credit for conservation 
                                        expenses.''
    (c) Effective Date.--The amendments made by this section shall 
apply to expenses paid or incurred after the date of the enactment of 
this Act.

SEC. 3. EXCLUSION FROM INCOME OF GRANTS MADE FOR QUALIFIED CONSERVATION 
              EXPENSES.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by redesignating section 137 
as section 138 and by inserting after section 136 the following new 
section:

``SEC. 137. GRANTS MADE FOR QUALIFIED CONSERVATION EXPENSES.

    ``(a) In General.--Gross income shall not include the amount of any 
grant which is--
            (1) made to the taxpayer for the purpose of paying, during 
        the taxable year, qualified conservation expenses with respect 
        to real property owned by the taxpayer, and
            (2) used by the taxpayer to pay such expenses.
    ``(b) Qualified Conservation Expenses.--For purposes of this 
section, the term `qualified conservation expenses' has the meaning 
given such term by section 30A(d).''
    (b) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of such Code is amended by striking the item 
relating to section 137 and inserting the following new items:

                              ``Sec. 137. Grants made for qualified 
                                        conservation expenses.
                              ``Sec. 138. Cross references to other 
                                        Acts.''
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts received after the date of the enactment of this Act.
Amends the Internal Revenue Code to permit an executor to exclude from the value of the gross estate an amount equal to the value of the qualified real property of the decedent which is maintained in accordance with habitat conservation concerns, if the executor files a habitat conservation agreement.  Provides for recapture if:  (1) an owner dispenses of any interest in the property; or (2) there is a material breach or termination by an owner of any agreement with respect to such property.  Permits a disposition by an owner, without recapture, if the owner (or his estate) and the transferee of the property enter into a written agreement under which the transferee agrees to:  (1)  assume the obligations imposed on the owner under the agreement; (2) assume liability for any tax imposed with respect to any future transfers or breaches; and (3) notify the Secretary of the Interior or of Commerce that the transferee has assumed the obligations and liabilities. 
Allows a tax credit in an amount equal to the applicable conservation expense amount.  Limits such credit allowed to a maximum of $1,500.  Provides for the carryforward of unused credit. 
Provides for exclusion from gross income of the amount of any grant which is:  (1) made to the taxpayer for the purpose of paying qualified conservation expenses with respect to real property owned by the taxpayer; and (2) used by the taxpayer to pay such expenses.
To amend the Internal Revenue Code of 1986 to provide an estate tax credit with respect to property managed according to certain habitat conservation agreements, to provide a credit for certain conservation expenses, and to exclude from income amounts received from others to pay for such expenses.