II

106TH CONGRESS

1ST SESSION S. 1392

To amend the Internal Revenue Code of 1986 to provide tax incentives

for the voluntary conservation of endangered species, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JULY 19, 1999

Mr. BAUCUS introduced the following bill; which was read twice and referred

to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to provide

tax incentives for the voluntary conservation of endangered species, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Species Conservation Tax Act of 1999’’.

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment

9 to, or repeal of, a section or other provision, the reference
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1 shall be considered to be made to a section or other provi2 sion of the Internal Revenue Code of 1986.

3 SEC. 2. TAX EXCLUSION FOR COST-SHARING PAYMENTS

4 UNDER PARTNERS FOR WILDLIFE PROGRAM.

5 (a) IN GENERAL.—Section 126(a) (relating to cer6 tain cost-sharing payments) is amended by redesignating

7 paragraph (10) as paragraph (11) and by inserting after

8 paragraph (9) the following:

9 ‘‘(10) The Partners for Fish and Wildlife Pro10 gram authorized by the Fish and Wildlife Act of

11 1956 (16 U.S.C. 742a et seq.).’’

12 (b) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to payments received after the date

14 of the enactment of this Act.

15 SEC. 3. ENHANCED DEDUCTION FOR THE DONATION OF A

16 CONSERVATION EASEMENT.

17 (a) IN GENERAL.—Subparagraph (A) of section

18 170(h)(4) (defining conservation purpose) is amended by

19 striking ‘‘or’’ at the end of clause (iii), by striking the pe20 riod at the end of clause (iv) and inserting ‘‘, or’’, and

21 by adding at the end the following:

22 ‘‘(v) the conservation of a species des23 ignated by the Secretary of the Interior or

24 the Secretary of Commerce under the En25 dangered Species Act of 1973 (16 U.S.C.
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1 1531 et seq) as endangered or threatened,

2 proposed by such Secretary for designation

3 as endangered or threatened, or identified

4 by such Secretary as a candidate for such

5 designation, provided the property is not

6 required, as of the date of contribution, to

7 be used for such purpose other than by

8 reason of the terms of contribution.’’

9 (b) ENHANCED DEDUCTIONS.—Subsection (e) of sec10 tion 170 (defining qualified conservation contribution) is

11 amended by adding at the end the following:

12 ‘‘(7) SPECIAL RULES FOR CONTRIBUTIONS RE13 LATED TO CONSERVATION OF SPECIES.—

14 ‘‘(A) IN GENERAL.—In the case of a quali15 fied conservation contribution by an individual

16 for the conservation of endangered or threat17 ened species, proposed species, or candidate

18 species under (h)(4)(v):

19 ‘‘(i) 50 PERCENT LIMITATION TO

20 APPLY.—Such a contribution shall be

21 treated for the purposes of this section as

22 described in subsection (b)(l)(A).

23 ‘‘(ii) 20-YEAR CARRY FORWARD.—

24 Subsection (d)(1) shall be applied by sub25 stituting ‘20 years’ for ‘5 years’ each place
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1 it appears and with appropriate adjust2 ments in the application of subparagraph

3 (A)(ii) thereof.

4 ‘‘(iii) UNUSED DEDUCTION CARRY5 OVER ALLOWED ON TAXPAYER’S LAST RE6 TURN.—If the taxpayer dies before the

7 close of the last taxable year for which a

8 deduction could have been allowed under

9 subsection (d)(1), any portion of the de10 duction for such contribution which has

11 not been allowed shall be allowed as a de12 duction under subsection (a) (without re13 gard to subsection (b)) for the taxable year

14 in which such death occurs or such portion

15 may be used as a deduction against the

16 gross estate of the taxpayer.’’

17 (c) EFFECTIVE DATE.—The amendments made by

18 this section shall apply to contributions made after the

19 date of the enactment of this Act.

20 SEC. 4. EXCLUSION FROM ESTATE TAX FOR REAL PROP21 ERTY SUBJECT TO ENDANGERED SPECIES

22 CONSERVATION AGREEMENT.

23 (a) IN GENERAL.—Part IV of subchapter A of chap24 ter 11 of the Internal Revenue Code of 1986 (relating to
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1 taxable estate) is amended by adding at the end the fol2 lowing new section:

3 ‘‘SEC. 2058. CERTAIN REAL PROPERTY SUBJECT TO ENDAN4 GERED SPECIES CONSERVATION AGREE5 MENT.

6 ‘‘(a) GENERAL RULE.—For purposes of the tax im7 posed by section 2001, the value of the taxable estate shall

8 be determined by deducting from the value of the gross

9 estate an amount equal to lesser of—

10 ‘‘(1) the adjusted value of real property in11 cluded in the gross estate which is subject to an en12 dangered species conservation agreement, or

13 ‘‘(2) $10,000,000.

14 ‘‘(b) PROPERTY SUBJECT TO AN ENDANGERED SPE15 CIES CONSERVATION AGREEMENT.—For purposes of this

16 section—

17 ‘‘(1) IN GENERAL.—Real property shall be

18 treated as subject to an endangered species con19 servation agreement if—

20 ‘‘(A) such property was owned by the dece21 dent or a member of the decedent’s family at all

22 times during the 3-year period ending on the

23 date of the decedent’s death,
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1 ‘‘(B) each person who has an interest in

2 such property (whether or not in possession)

3 has entered into—

4 ‘‘(i) an endangered species conserva5 tion agreement with respect to such prop6 erty, and

7 ‘‘(ii) a written agreement with the

8 Secretary consenting to the application of

9 subsection (d), and

10 ‘‘(C) the executor of the decedent’s

11 estate—

12 ‘‘(i) elects the application of this sec13 tion, and

14 ‘‘(ii) files with the Secretary such en15 dangered species conservation agreement.

16 ‘‘(2) ADJUSTED VALUE.—

17 ‘‘(A) IN GENERAL.—The adjusted value of

18 any real property shall be its value for purposes

19 of this chapter, reduced by—

20 ‘‘(i) any amount deductible under sec21 tion 2055(f) with respect to the property,

22 and

23 ‘‘(ii) any acquisition indebtedness with

24 respect to the property.
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1 ‘‘(B) ACQUISITION INDEBTEDNESS.—For

2 purposes of this paragraph, the term ‘acquisi3 tion indebtedness’ means, with respect to any

4 real property, the unpaid amount of—

5 ‘‘(i) the indebtedness incurred by the

6 donor in acquiring such property,

7 ‘‘(ii) the indebtedness incurred before

8 the acquisition of such property if such in9 debtedness would not have been incurred

10 but for such acquisition,

11 ‘‘(iii) the indebtedness incurred after

12 the acquisition of such property if such in13 debtedness would not have been incurred

14 but for such acquisition and the incurrence

15 of such indebtedness was reasonably fore16 seeable at the time of such acquisition, and

17 ‘‘(iv) the extension, renewal, or refi18 nancing of an acquisition indebtedness.

19 ‘‘(c) ENDANGERED SPECIES CONSERVATION AGREE20 MENT.—For purposes of this section—

21 ‘‘(1) IN GENERAL.—The term ‘endangered spe22 cies conservation agreement’ means a written agree23 ment entered into with the Secretary of the Interior

24 or the Secretary of Commerce—
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1 ‘‘(A) which commits each person who

2 signed such agreement to carry out on the real

3 property activities or practices not otherwise re4 quired by law or to refrain from carrying out on

5 such property activities or practices that could

6 otherwise be lawfully carried out and includes—

7 ‘‘(i) objective and measurable species

8 of concern conservation goals,

9 ‘‘(ii) site-specific and other manage10 ment measures necessary to achieve those

11 goals, and

12 ‘‘(iii) objective and measurable criteria

13 to monitor progress toward those goals,

14 ‘‘(B) which is certified by such Secretary

15 as providing a major contribution to the con16 servation of a species of concern, and

17 ‘‘(C) which is for a term that such Sec18 retary determines is sufficient to achieve the

19 purposes of the agreement, but not less than 10

20 years beginning on the date of the decedent’s

21 death.

22 ‘‘(2) SPECIES OF CONCERN.—The term ‘species

23 of concern’ means any species designated by the Sec24 retary of the Interior or the Secretary of Commerce

25 under the Endangered Species Act of 1973 (16
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1 U.S.C. 1531 et seq) as endangered or threatened,

2 proposed by such Secretary for designation as en3 dangered or threatened, or identified by such Sec4 retary as a candidate for such designation.

5 ‘‘(3) ANNUAL CERTIFICATION TO THE SEC6 RETARY BY THE SECRETARY OF THE INTERIOR OR

7 THE SECRETARY OF COMMERCE OF THE STATUS OF

8 ENDANGERED SPECIES CONSERVATION AGREE9 MENTS.—If the executor elects the application of

10 this section, the executor shall promptly give written

11 notice of such election to the Secretary of the Inte12 rior or the Secretary of Commerce. The Secretary of

13 the Interior or the Secretary of Commerce shall

14 thereafter annually certify to the Secretary that the

15 endangered species conservation agreement applica16 ble to any property for which such election has been

17 made remains in effect and is being satisfactorily

18 complied with.

19 ‘‘(d) RECAPTURE OF TAX BENEFIT IN CERTAIN

20 CASES.—

21 ‘‘(1) DISPOSITION OF INTEREST OR MATERIAL

22 BREACH.—

23 ‘‘(A) IN GENERAL.—An additional tax in

24 the amount determined under subparagraph
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1 (B) shall be imposed on any person on the ear2 lier of—

3 ‘‘(i) the disposition by such person of

4 any interest in property subject to an en5 dangered species conservation agreement

6 (other than a disposition described in sub7 paragraph (C)),

8 ‘‘(ii) a material breach by such person

9 of the endangered species conservation

10 agreement, or

11 ‘‘(iii) the termination of the endan12 gered species conservation agreement.

13 ‘‘(B) AMOUNT OF ADDITIONAL TAX.—

14 ‘‘(i) IN GENERAL.—The amount of

15 the additional tax imposed by subpara16 graph (A) with respect to any interest shall

17 be an amount equal to the applicable per18 centage of the lesser of—

19 ‘‘(I) the adjusted tax difference

20 attributable to such interest (within

21 the meaning of section

22 2032A(c)(2)(B)), or

23 ‘‘(II) the excess of the amount

24 realized with respect to the interest

25 (or, in any case other than a sale or
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1 exchange at arm’s length, the fair

2 market value of the interest) over the

3 value of the interest determined under

4 subsection (a).

5 ‘‘(ii) APPLICABLE PERCENTAGE.—For

6 purposes of clause (i), the applicable per7 centage is determined in accordance with

8 the following table:

‘‘If, with respect to the date

of the agreement, the

date of the event described in subparagraph

(A) occurs—

The applicable percentage is—

Before 10 years ........................................................................ 100

After 9 years and before 20 years ........................................... 75

After 19 years and before 30 years ......................................... 50

After 29 years and before 40 years ......................................... 25

After 39 .................................................................................... 0.

9 ‘‘(C) EXCEPTION IF CERTAIN HEIRS AS10 SUME OBLIGATIONS UPON THE DEATH OF A

11 PERSON EXECUTING THE AGREEMENT.—Sub12 paragraph (A)(i) shall not apply if—

13 ‘‘(i) upon the death of a person de14 scribed in subsection (b)(1)(B) during the

15 term of such agreement, the property sub16 ject to such agreement passes to a member

17 of the person’s family, and

18 ‘‘(ii) the member agrees—

19 ‘‘(I) to assume the obligations

20 imposed on such person under the en-
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1 dangered species conservation agree2 ment,

3 ‘‘(II) to assume personal liability

4 for any tax imposed under subpara5 graph (A) with respect to any future

6 event described in subparagraph (A),

7 and

8 ‘‘(III) to notify the Secretary of

9 the Treasury and the Secretary of the

10 Interior or the Secretary of Commerce

11 that the member has assumed such

12 obligations and liability.

13 If a member of the person’s family enters into

14 an agreement described in subclauses (I), (II),

15 and (III), such member shall be treated as sig16 natory to the endangered species conservation

17 agreement the person entered into.

18 ‘‘(2) DUE DATE OF ADDITIONAL TAX.—The ad19 ditional tax imposed by paragraph (1) shall become

20 due and payable on the day that is 6 months after

21 the date of the disposition referred to in paragraph

22 (1)(A)(i) or, in the case of an event described in

23 clause (ii) or (iii) of paragraph (1)(A), on April 15

24 of the calendar year following any year in which the

25 Secretary of the Interior or the Secretary of Com-
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1 merce fails to provide the certification required

2 under subsection (c)(3).

3 ‘‘(e) STATUTE OF LIMITATIONS.—If a taxpayer in4 curs a tax liability pursuant to subsection (d)(1)(A),

5 then—

6 ‘‘(1) the statutory period for the assessment of

7 any additional tax imposed by subsection (d)(1)(A)

8 shall not expire before the expiration of 3 years from

9 the date the Secretary is notified (in such manner

10 as the Secretary may by regulation prescribe) of the

11 incurring of such tax liability, and

12 ‘‘(2) such additional tax may be assessed before

13 the expiration of such 3-year period notwithstanding

14 the provisions of any other law or rule of law that

15 would otherwise prevent such assessment.

16 ‘‘(f) ELECTION AND FILING OF AGREEMENT.—The

17 election under this section shall be made on the return

18 of the tax imposed by section 2001. Such election, and

19 the filing under subsection (b) of an endangered species

20 conservation agreement, shall be made in such manner as

21 the Secretary shall by regulation provide.

22 ‘‘(g) APPLICATION OF THIS SECTION TO INTERESTS

23 IN PARTNERSHIPS, CORPORATIONS, AND TRUSTS.—This

24 section shall apply to an interest in a partnership, corpora25 tion, or trust if at least 30 percent of the entity is owned
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1 (directly or indirectly) by the decedent, as determined

2 under the rules described in section 2057(e)(3).

3 ‘‘(h) MEMBER OF FAMILY.—For purposes of this sec4 tion, the term ‘member of the family’ means any member

5 of the family (as defined in section 2032A(e)(2)) of the

6 decedent.’’

7 (b) CARRYOVER BASIS.—Section 1014(a)(4) of the

8 Internal Revenue Code of 1986 (relating to basis of prop9 erty acquired from a decedent) is amended by inserting

10 ‘‘or 2058’’ after ‘‘section 2031(c)’’.

11 (c) CLERICAL AMENDMENT.—The table of sections

12 for part IV of subchapter A of chapter 11 of the Internal

13 Revenue Code of 1986 is amended by adding at the end

14 the following new item:

‘‘Sec. 2058. Certain real property subject to endangered species

conservation agreement.’’

15 (d) EFFECTIVE DATE.—The amendments made by

16 this section shall apply to estates of decedents dying after

17 the date of the enactment of this Act.

18 SEC. 5. EXPANSION OF ESTATE TAX EXCLUSION FOR REAL

19 PROPERTY SUBJECT TO QUALIFIED CON20 SERVATION EASEMENT.

21 (a) REPEAL OF CERTAIN RESTRICTIONS ON WHERE

22 LAND IS LOCATED.—Clause (i) of section 2031(c)(8)(A)

23 (defining land subject to a qualified conservation ease24 ment) is amended to read as follows:
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1 ‘‘(i) which is located in the United

2 States or any possession of the United

3 States,’’.

4 (b) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to estates of decedents dying after

6 the date of the enactment of this Act.

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