I 

108TH CONGRESS 

1ST SESSION H. R. 159

To amend the Internal Revenue Code of 1986 to exclude from gross income 

gain on the sale or exchange of certain farmland the use of which 

is restricted in perpetuity to use as farmland. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 7, 2003

Mr. PITTS introduced the following bill; which was referred to the Committee 

on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to exclude 

from gross income gain on the sale or exchange of certain farmland the use of which is restricted in perpetuity 

to use as farmland.

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. 

4 This Act may be cited as the ‘‘Open Space Preserva5 tion Act of 2003’’. 
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1 SEC. 2. EXCLUSION OF GAIN FROM SALE OF CERTAIN 

2 FARMLAND. 

3 (a) GENERAL RULE.—Part III of subchapter B of 

4 chapter 1 of the Internal Revenue Code of 1986 (relating 

5 to items specifically excluded from gross income) is 

6 amended by redesignating section 139 as section 139A 

7 and by inserting after section 138 the following new sec8 tion: 

9 ‘‘SEC. 139. SALES AND EXCHANGES OF CERTAIN FARMLAND 

10 WHICH BY COVENANT IS RESTRICTED TO USE 

11 AS FARMLAND. 

12 ‘‘(a) GENERAL RULE.—In the case of an operator of 

13 qualified farmland, gross income does not include gain 

14 from the sale or exchange of qualified farmland if there 

15 is in effect on the date of such sale or exchange a qualified 

16 farmland conservation easement. 

17 ‘‘(b) DEFINITIONS.—For purposes of this section—

18 ‘‘(1) QUALIFIED FARMLAND.—The term ‘quali19 fied farmland’ means any real property—

20 ‘‘(A) which is located in the United States, 

21 ‘‘(B) which is used as a farm for farming 

22 purposes (within the meaning of section 

23 2032A(e)), and 

24 ‘‘(C) which is located in a county which 

25 has a population of 100 or more persons per 

26 square mile. 
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1 ‘‘(2) QUALIFIED FARMLAND CONSERVATION

2 EASEMENT.—The term ‘qualified farmland conserva3 tion easement’ means a restriction (granted in per4 petuity) which does not permit any use of the land 

5 for any purpose other than use as a farm for farm6 ing purposes (within the meaning of section 

7 2032A(e)). 

8 ‘‘(c) VERIFICATION OF EASEMENT.—Subsection (a) 

9 shall not apply by reason of any qualified farmland con10 servation easement unless the taxpayer—

11 ‘‘(1) notifies (in such form and manner as the 

12 Secretary may by regulations prescribe) both the 

13 Secretary and the Secretary of Agriculture of the 

14 political subdivision of the State in which such ease15 ment is recorded, and 

16 ‘‘(2) submits to the Secretary a copy of such 

17 easement.’’

18 (b) CLERICAL AMENDMENT.—The table of sections 

19 for such part is amended by striking the last item and 

20 inserting the following new items:

‘‘Sec. 139. Sales and exchanges of certain farmland which by covenant is restricted to use as farmland. 

‘‘Sec. 139A. Cross references to other Acts.’’

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

22 this section shall apply to restrictions first recorded after 
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1 December 31, 2003, and to sales and exchanges after such 

2 date.

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