I

107TH CONGRESS

1ST SESSION H. R. 892

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

MARCH 6, 2001

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 2001’’.
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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, 2001, and to sales and exchanges after such

2 date.

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