I

104TH CONGRESS

1ST SESSION H. R. 2423

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.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 28, 1995

Mr. SAXTON (for himself, Mr. EWING, Mr. MCCOLLUM, and Mr.

THORNBERRY) 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 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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. ESTATE TAX DEFERRAL IF REAL PROPERTY

2 MANAGED ACCORDING TO HABITAT CON3 SERVATION AGREEMENT.

4 (a) IN GENERAL.—Part IV of subchapter A of chap5 ter 11 of the Internal Revenue Code of 1986 (relating to

6 tax imposed) is amended by adding at the end the follow7 ing new section:

8 ‘‘SEC. 2057. EXCLUSION OF REAL PROPERTY MANAGED

9 UNDER HABITAT CONSERVATION AGREE10 MENT.

11 ‘‘(a) IN GENERAL.—If the executor elects the appli12 cation of this section and files the agreement referred to

13 in subsection (b), then for purposes of the tax imposed

14 by section 2001 the value of the taxable estate shall be

15 determined by deducting from the value of the gross estate

16 an amount equal to the value of the qualified real property

17 of the decedent included in determining the gross estate.

18 ‘‘(b) QUALIFIED REAL PROPERTY.—For purposes of

19 this section, the term ‘qualified real property’ means real

20 property with respect to which each owner has entered

21 into an agreement—

22 ‘‘(1) with the Secretary of the Interior or the

23 Secretary of Commerce, under which each owner

24 agrees to maintain the property in accordance with

25 habitat conservation concerns, as determined by the

26 agreement, or
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1 ‘‘(2) with a State environmental agency, under

2 which each owner agrees to so maintain the prop3 erty, if the agreement is approved by the Secretary

4 of the Interior or the Secretary of Commerce.

5 ‘‘(c) RECAPTURE.—

6 ‘‘(1) DISPOSITION OF INTEREST, MATERIAL

7 BREACH, OR TERMINATION.—

8 ‘‘(A) IN GENERAL.—Except as provided in

9 subparagraph (C), if—

10 ‘‘(i) any owner disposes of any inter11 est in the property to which subsection (a)

12 applies, or

13 ‘‘(ii) there is a material breach or ter14 mination by any owner of any agreement

15 described in subsection (b) with respect to

16 such property,

17 then there is hereby imposed an additional tax.

18 ‘‘(B) AMOUNT OF TAX.—The amount of

19 the tax imposed by subparagraph (A) with re20 spect to any property shall equal the sum of—

21 ‘‘(i) the difference between—

22 ‘‘(I) the amount of the tax im23 posed by section 2001 on the estate of

24 the decedent, and
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1 ‘‘(II) the amount of tax which

2 would have been so imposed if the

3 value of real property excluded under

4 subsection (a) had been included in

5 the gross estate at the fair market

6 value applicable at the time of the dis7 position, breach, or termination re8 ferred to in subparagraph (A), and

9 ‘‘(ii) if the disposition, breach, or ter10 mination referred to in subparagraph (A)

11 occurs during the 2-year period beginning

12 on the date of the death of the decedent

13 referred to subsection (a), interest on the

14 amount described in clause (i), determined

15 using the underpayment rate established

16 under section 6621, for the period begin17 ning on the due date of the return of the

18 tax imposed by section 2001 (determined

19 without regard to any extension) and end20 ing on the date of the payment of the addi21 tional tax under this paragraph.

22 ‘‘(C) EXCEPTION IF TRANSFEREE AS23 SUMES OBLIGATIONS OF TRANSFEROR.—Sub24 paragraph (A)(i) shall not apply to a disposition

25 by an owner if the owner (or his estate) and the
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1 transferee of the property enter into a written

2 agreement under which the transferee agrees—

3 ‘‘(i) to assume the obligations imposed

4 on the owner under the agreement de5 scribed in subsection (b),

6 ‘‘(ii) to assume liability for any tax

7 imposed under subparagraph (A) with re8 spect to any future transfers or breaches

9 by such transferee, and

10 ‘‘(iii) to notify the Secretary of the In11 terior or the Secretary of Commerce

12 (whichever is applicable) and the Secretary

13 that the transferee has assumed the obliga14 tions and liabilities described in clauses (i)

15 and (ii).

16 If an owner and a transferee enter into an

17 agreement described in clauses (i), (ii), and

18 (iii), such transferee shall be treated for pur19 poses of this section as having entered into an

20 agreement described in subsection (b).

21 ‘‘(2) STATUTE OF LIMITATIONS.—If a taxpayer

22 incurs a tax liability pursuant to paragraph (1),

23 then—

24 ‘‘(A) the statutory period for the assess25 ment of any additional tax imposed by para-
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1 graph (1) shall not expire before the expiration

2 of 3 years from the date the Secretary is noti3 fied (in such manner as the Secretary may by

4 regulation prescribe) of the incurring of such

5 tax liability, and

6 ‘‘(B) such additional tax may be assessed

7 before the expiration of such 3-year period not8 withstanding the provisions of any other law or

9 rule of law that would otherwise prevent such

10 assessment.

11 ‘‘(d) OWNER.—For purposes of this section, the term

12 ‘owner’ means a person in being who has an interest

13 (whether or not in possession) in real property.

14 ‘‘(e) ELECTION AND FILING OF AGREEMENT.—

15 ‘‘(1) ELECTION.—The election under this sec16 tion shall be made on the return of the tax imposed

17 by section 2001. Such election shall be made in such

18 manner as the Secretary shall by regulation provide.

19 ‘‘(2) AGREEMENT.—The agreement described

20 in subsection (b) shall be filed in such manner as the

21 Secretary shall by regulation prescribe.’’

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

23 for part II of subchapter A of chapter 11 of such Code

24 is amended by adding at the end the following new item:

‘‘Sec. 2017. Credit if real property managed under habitat conservation agreement.’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this Act shall apply to the estates of decedents dying after

3 the date of the enactment of this Act.

4 SEC. 2. CREDIT FOR CERTAIN CONSERVATION EXPENSES.

5 (a) IN GENERAL.—Subpart B of part IV of sub6 chapter A of chapter 1 of the Internal Revenue Code of

7 1986 is amended by adding at the end the following new

8 section:

9 ‘‘SEC. 30A. CREDIT FOR CONSERVATION EXPENSES.

10 ‘‘(a) IN GENERAL.—There shall be allowed as a cred11 it against the tax imposed by this chapter for the taxable

12 year an amount equal to the applicable conservation ex13 pense amount for the taxable year.

14 ‘‘(b) APPLICABLE CONSERVATION EXPENSE

15 AMOUNT.—For purposes of this section—

16 ‘‘(1) IN GENERAL.—The term ‘applicable con17 servation expense amount’ means, with respect to

18 qualified conservation expenses paid or incurred by

19 the taxpayer during the taxable year—

20 ‘‘(A) such qualified conservation expenses,

21 if the out-of-pocket expenses of the taxpayer are

22 50 percent or more of such qualified conserva23 tion expenses, or

24 ‘‘(B) the out-of-pocket expenses of the tax25 payer, if the out-of-pocket expenses are less
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1 than 50 percent of such qualified conservation

2 expenses.

3 ‘‘(2) OUT-OF-POCKET EXPENSES.—The term

4 ‘out-of-pocket expenses’ means, with respect to

5 qualified conservation expenses paid or incurred by

6 the taxpayer during the taxable year, the excess of—

7 ‘‘(A) such qualified conservation expenses,

8 over

9 ‘‘(B) the amount of any grant to the tax10 payer which is—

11 ‘‘(i) made for the purpose of paying

12 such qualified conservation expenses, and

13 ‘‘(ii) excludable from income.

14 ‘‘(c) QUALIFIED CONSERVATION EXPENSES.—For

15 purposes of this section—

16 ‘‘(1) IN GENERAL.—The term ‘qualified con17 servation expenses’ means, with respect to any real

18 property, expenses paid or incurred for—

19 ‘‘(A) any action taken pursuant to a quali20 fied conservation agreement for such property,

21 or

22 ‘‘(B) any qualified conservation activity.

23 ‘‘(2) QUALIFIED CONSERVATION ACTIVITY.—

24 The term ‘qualified conservation activity’ means any

25 activity so designated for purposes of this paragraph
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1 by the Director of the United States Fish and Wild2 life Service or the Administrator of the National Ma3 rine Fisheries Service.

4 ‘‘(3) QUALIFIED CONSERVATION AGREE5 MENT.—The term ‘qualified conservation agreement’

6 means an agreement described in section 2057(b).

7 ‘‘(d) LIMITATION.—The credit allowed under this sec8 tion for any taxable year may not exceed $1,500.

9 ‘‘(e) CARRYFORWARD OR UNUSED CREDIT.—If the

10 credit allowable under subsection (a) for any taxable year

11 exceeds the limitation imposed by section 26(a) for such

12 taxable year reduced by the sum of the credits allowable

13 under subpart A and this subpart (other than this sec14 tion), such excess shall be carried to the succeeding tax15 able year and added to the credit allowable under sub16 section (a) for such succeeding taxable year up to 10

17 years.

18 ‘‘(f) DENIAL OF DOUBLE BENEFIT.—No deduction

19 may be allowed under this chapter for any expense for

20 which a credit is allowed under this section.

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

22 for subpart B of part IV of subchapter A of chapter 1

23 of such Code is amended by adding at the end the follow24 ing new item:

‘‘Sec. 30A. Credit for conservation expenses.’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to expenses paid or incurred after

3 the date of the enactment of this Act.

4 SEC. 3. EXCLUSION FROM INCOME OF GRANTS MADE FOR

5 QUALIFIED CONSERVATION EXPENSES.

6 (a) IN GENERAL.—Part III of subchapter B of chap7 ter 1 of the Internal Revenue Code of 1986 is amended

8 by redesignating section 137 as section 138 and by insert9 ing after section 136 the following new section:

10 ‘‘SEC. 137. GRANTS MADE FOR QUALIFIED CONSERVATION

11 EXPENSES.

12 ‘‘(a) IN GENERAL.—Gross income shall not include

13 the amount of any grant which is—

14 (1) made to the taxpayer for the purpose of

15 paying, during the taxable year, qualified conserva16 tion expenses with respect to real property owned by

17 the taxpayer, and

18 (2) used by the taxpayer to pay such expenses.

19 ‘‘(b) QUALIFIED CONSERVATION EXPENSES.—For

20 purposes of this section, the term ‘qualified conservation

21 expenses’ has the meaning given such term by section

22 30A(d).’’

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

24 for part III of subchapter B of chapter 1 of such Code
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1 is amended by striking the item relating to section 137

2 and inserting the following new items:

‘‘Sec. 137. Grants made for qualified conservation expenses.

‘‘Sec. 138. Cross references to other Acts.’’

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

4 this section shall apply to amounts received after the date

5 of the enactment of this Act.

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