II 

112TH CONGRESS 

2D SESSION S. 2200 

To amend the Internal Revenue Code of 1986 to exempt certain familyowned farms and businesses from the estate tax. 

IN THE SENATE OF THE UNITED STATES 

MARCH 15, 2012 

Mr. LEE 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 exempt 

certain family-owned farms and businesses from the estate tax. 

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 ‘‘Saving the Family 

5 Farm Act of 2012’’. 


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1 SEC. 2. EXCLUSION FROM GROSS ESTATE OF CERTAIN 

2 FARMLAND SO LONG AS FARMLAND USE 

3 CONTINUES. 

4 (a) IN GENERAL.—Part III of subchapter A of chap5 ter 11 of the Internal Revenue Code of 1986 is amended 

6 by inserting after section 2033 the following new section: 

7 ‘‘SEC. 2033A. EXCLUSION OF CERTAIN FAMILY-OWNED 

8 FARMS AND BUSINESSES. 

9 ‘‘(a) IN GENERAL.—In the case of an estate of a de10 cedent to which this section applies, the value of the gross 

11 estate shall not include the adjusted value of any qualified 

12 family-owned farm or business included in the estate. 

13 ‘‘(b) ESTATES TO WHICH SECTION APPLIES.—This 

14 section shall apply to an estate if— 

15 ‘‘(1) the decedent was (at the date of the dece16 dent’s death) a citizen or resident of the United 

17 States, and 

18 ‘‘(2) during the 8-year period ending on the 

19 date of the decedent’s death there have been periods 

20 aggregating 5 years or more during which— 

21 ‘‘(A) not less than 60 percent of the quali22 fied family-owned farm or business was owned 

23 by the decedent and members of the decedent’s 

24 family, and 

25 ‘‘(B) there was material participation 

26 (within the meaning of section 2032A(e)(6)) by 


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1 the decedent or the qualified heir in the oper2 ation of such farm or business. 

3 Rules similar to the rules of paragraphs (4) and (5) of 

4 section 2032A(b) shall apply for purposes of subparagraph 

5 (B). 

6 ‘‘(c) DEFINITIONS.—For purposes of this section— 

7 ‘‘(1) QUALIFIED FAMILY-OWNED FARM OR

8 BUSINESS.—The term ‘qualified family-owned farm 

9 or business’ means— 

10 ‘‘(A) any qualified farmland, or 

11 ‘‘(B) any qualified trade or business. 

12 ‘‘(2) QUALIFIED FARMLAND.—The term ‘quali13 fied farmland’ means any real property— 

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

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

16 purposes (within the meaning of section 

17 2032A(e)), and 

18 ‘‘(C) which was acquired from or passed 

19 from the decedent to a qualified heir of the de20 cedent and which, on the date of the decedent’s 

21 death, was being so used by the decedent or a 

22 member of the decedent’s family. 

23 ‘‘(3) QUALIFIED TRADE OR BUSINESS.—The 

24 term ‘qualified trade or business’ means any interest 

25 in a trade or business of the taxpayer— 


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1 ‘‘(A) which is not an interest in a C cor2 poration, and 

3 ‘‘(B) which was acquired from or passed 

4 from the decedent to a qualified heir of the de5 cedent. 

6 ‘‘(4) ADJUSTED VALUE.—The term ‘adjusted 

7 value’ means the value of the qualified family-owned 

8 farm or business for purposes of this chapter (deter9 mined without regard to this section), reduced by 

10 the amount deductible under paragraph (3) or (4) of 

11 section 2053(a). 

12 ‘‘(5) OTHER TERMS.—Any other term used in 

13 this section which is also used in section 2032A shall 

14 have the same meaning given such term by section 

15 2032A. 

16 ‘‘(d) TAX TREATMENT OF DISPOSITIONS AND FAIL17 URES TO USE FOR FARMING PURPOSES.— 

18 ‘‘(1) IMPOSITION OF RECAPTURE TAX.—If, at 

19 any time after the decedent’s death and before the 

20 death of the qualified heir— 

21 ‘‘(A) the qualified heir disposes of any in22 terest in qualified family-owned farm or busi23 ness (other than by a disposition to a member 

24 of his family), or 


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1 ‘‘(B) in the case of qualified farmland, the 

2 qualified heir ceases to use the real property 

3 which was acquired (or passed) from the dece4 dent as a farm for farming purposes, 

5 then, there is hereby imposed a recapture tax. 

6 ‘‘(2) AMOUNT OF RECAPTURE TAX, ETC.— 

7 Rules similar to the rules of section 2032A(c) with 

8 respect to the additional estate tax shall apply for 

9 purposes of this subsection with respect to the re10 capture tax. 

11 ‘‘(e) APPLICATION OF OTHER RULES.—To the extent 

12 provided by the Secretary in regulations, rules similar to 

13 the rules of subsections (e), (f), (g), (h), and (i) of section 

14 2032A shall apply for purposes of this section.’’ 

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

16 for part III of subchapter A of chapter 11 of such Code 

17 is amended by inserting after the item relating to section 

18 2033 the following new item: 

‘‘Sec. 2033A. Exclusion of certain family-owned farms and businesses.’’. 

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

20 this section shall apply to estates of decedents dying after 

21 the date of the enactment of this Act. 

Æ 


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