II 

117TH CONGRESS 

1ST SESSION S. 2256 

To amend the Internal Revenue Code of 1986 to limit the charitable deduction 

for certain qualified conservation contributions. 

IN THE SENATE OF THE UNITED STATES 

JUNE 24, 2021 

Mr. DAINES (for himself, Ms. STABENOW, Mr. WYDEN, and Mr. GRASSLEY) 

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 limit the 

charitable deduction for certain qualified conservation 

contributions. 

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 ‘‘Charitable Conserva5 tion Easement Program Integrity Act of 2021’’. 


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1 SEC. 2. LIMITATION ON DEDUCTION FOR QUALIFIED CON2 SERVATION CONTRIBUTIONS MADE BY PASS3 THROUGH ENTITIES. 

4 (a) IN GENERAL.—Section 170(h) of the Internal 

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

6 the following new paragraph: 

7 ‘‘(7) LIMITATION ON DEDUCTION FOR QUALI8 FIED CONSERVATION CONTRIBUTIONS MADE BY

9 PASS-THROUGH ENTITIES.— 

10 ‘‘(A) IN GENERAL.—A contribution by a 

11 partnership (whether directly or as a distribu12 tive share of a contribution of another partner13 ship) shall not be treated as a qualified con14 servation contribution for purposes of this sec15 tion if the amount of such contribution exceeds 

16 2.5 times the sum of each partner’s relevant 

17 basis in such partnership. 

18 ‘‘(B) RELEVANT BASIS.—For purposes of 

19 this paragraph— 

20 ‘‘(i) IN GENERAL.—The term ‘relevant 

21 basis’ means, with respect to any partner, 

22 the portion of such partner’s modified 

23 basis in the partnership which is allocable 

24 (under rules similar to the rules of section 

25 755) to the portion of the real property 


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1 with respect to which the contribution de2 scribed in subparagraph (A) is made. 

3 ‘‘(ii) MODIFIED BASIS.—The term 

4 ‘modified basis’ means, with respect to any 

5 partner, such partner’s adjusted basis in 

6 the partnership as determined— 

7 ‘‘(I) immediately before the con8 tribution described in subparagraph 

9 (A), 

10 ‘‘(II) without regard to section 

11 752, and 

12 ‘‘(III) by the partnership after 

13 taking into account the adjustments 

14 described in subclauses (I) and (II) 

15 and such other adjustments as the 

16 Secretary may provide. 

17 ‘‘(C) EXCEPTION FOR CONTRIBUTIONS

18 OUTSIDE 3-YEAR HOLDING PERIOD.—Subpara19 graph (A) shall not apply to any contribution 

20 which is made at least 3 years after the latest 

21 of— 

22 ‘‘(i) the last date on which the part23 nership that made such contribution ac24 quired any portion of the real property 


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1 with respect to which such contribution is 

2 made, 

3 ‘‘(ii) the last date on which any part4 ner in the partnership that made such con5 tribution acquired any interest in such 

6 partnership, and 

7 ‘‘(iii) if the interest in the partnership 

8 that made such contribution is held 

9 through one or more partnerships— 

10 ‘‘(I) the last date on which any 

11 such partnership acquired any interest 

12 in any other such partnership, and 

13 ‘‘(II) the last date on which any 

14 partner in any such partnership ac15 quired any interest in such partner16 ship. 

17 ‘‘(D) EXCEPTION FOR FAMILY PARTNER18 SHIPS.— 

19 ‘‘(i) IN GENERAL.—Subparagraph (A) 

20 shall not apply with respect to any con21 tribution made by any partnership if sub22 stantially all of the partnership interests in 

23 such partnership are held, directly or indi24 rectly, by an individual and members of 

25 the family of such individual. 


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1 ‘‘(ii) MEMBERS OF THE FAMILY.—For 

2 purposes of this subparagraph, the term 

3 ‘members of the family’ means, with re4 spect to any individual— 

5 ‘‘(I) the spouse of such indi6 vidual, and 

7 ‘‘(II) any individual who bears a 

8 relationship to such individual which 

9 is described in subparagraphs (A) 

10 through (G) of section 152(d)(2). 

11 ‘‘(E) APPLICATION TO OTHER PASS12 THROUGH ENTITIES.—Except as may be other13 wise provided by the Secretary, the rules of this 

14 paragraph shall apply to S corporations and 

15 other pass-through entities in the same manner 

16 as such rules apply to partnerships. 

17 ‘‘(F) REGULATIONS.—The Secretary shall 

18 prescribe such regulations or other guidance as 

19 may be necessary or appropriate to carry out 

20 the purposes of this paragraph, including regu21 lations or other guidance— 

22 ‘‘(i) to require reporting, including re23 porting related to tiered partnerships and 

24 the modified basis of partners, and 


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1 ‘‘(ii) to prevent the avoidance of the 

2 purposes of this paragraph.’’. 

3 (b) APPLICATION OF ACCURACY-RELATED PEN4 ALTIES.— 

5 (1) IN GENERAL.—Section 6662(b) of the In6 ternal Revenue Code of 1986 is amended by insert7 ing after paragraph (9) the following new para8 graph: 

9 ‘‘(10) Any disallowance of a deduction by rea10 son of section 170(h)(7).’’. 

11 (2) TREATMENT AS GROSS VALUATION

12 MISSTATEMENT.—Section 6662(h)(2) of such Code 

13 is amended by striking ‘‘and’’ at the end of subpara14 graph (B), by striking the period at the end of sub15 paragraph (C) and inserting ‘‘, and’’, and by adding 

16 at the end the following new subparagraph: 

17 ‘‘(D) any disallowance of a deduction de18 scribed in subsection (b)(10).’’. 

19 (3) NO REASONABLE CAUSE EXCEPTION.—Sec20 tion 6664(c)(2) of such Code is amended by insert21 ing ‘‘or to any disallowance of a deduction described 

22 in section 6662(b)(10)’’ before the period at the end. 

23 (4) APPROVAL OF ASSESSMENT NOT RE24 QUIRED.—Section 6751(b)(2)(A) of such Code is 


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1 amended by striking ‘‘subsection (b)(9)’’ and insert2 ing ‘‘paragraph (9) or (10) of subsection (b)’’. 

3 (c) APPLICATION OF STATUTE OF LIMITATIONS ON

4 ASSESSMENT AND COLLECTION.— 

5 (1) EXTENSION FOR CERTAIN ADJUSTMENTS

6 MADE UNDER PRIOR LAW.—In the case of any dis7 allowance of a deduction by reason of section 

8 170(h)(7) of the Internal Revenue Code of 1986 (as 

9 added by this section) or any penalty imposed under 

10 section 6662 of such Code with respect to such dis11 allowance, section 6229(d)(2) of such Code (as in ef12 fect before its repeal) shall be applied by sub13 stituting ‘‘2 years’’ for ‘‘1 year’’. 

14 (2) EXTENSION FOR LISTED TRANSACTIONS.— 

15 Any contribution described in section 170(h)(7)(A) 

16 of the Internal Revenue Code of 1986 (as added by 

17 this section) shall be treated for purpose of sections 

18 6501(c)(10) and 6235(c)(6) of such Code as a 

19 transaction specifically identified by the Secretary on 

20 December 23, 2016, as a tax avoidance transaction 

21 for purposes of section 6011 of such Code. 

22 (d) APPLICATION TO CERTAIN TRANSACTIONS DIS23 ALLOWED UNDER OTHER PROVISIONS OF LAW.—In the 

24 case of any disallowance of a deduction under section 170 

25 of the Internal Revenue Code of 1986 with respect a 


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1 transaction described in Internal Revenue Service Notice 

2 2017-10 with respect to a taxable year ending before the 

3 date of the enactment of this Act, such disallowance shall 

4 be treated for purposes of section 6662(b)(10) of such 

5 Code (as added by this section) and subsection (c)(1) as 

6 being by reason of section 170(h)(7) of such Code (as 

7 added by this section). 

8 (e) EFFECTIVE DATE.— 

9 (1) IN GENERAL.—Except as provided in para10 graph (2), the amendments made by this section 

11 shall apply to contributions made after December 

12 23, 2016, in taxable years ending after such date. 

13 (2) CERTIFIED HISTORIC STRUCTURES.—In the 

14 case of contributions the conservation purpose (as 

15 defined in section 170(h)(4) of the Internal Revenue 

16 Code of 1986) of which is the preservation of a cer17 tified historic structure (as defined in section 

18 170(h)(4)(C) of such Code), the amendments made 

19 by this section shall apply to contributions made in 

20 taxable years beginning after December 31, 2018. 

21 (3) NO INFERENCE.—No inference is intended 

22 as to the appropriate treatment of contributions 

23 made in taxable years ending on or before the date 

24 specified in paragraph (1) or (2), whichever is appli25 cable, or as to any activity not described in section 


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1 170(h)(7) of the Internal Revenue Code of 1986, as 

2 added by this section. 

Æ 


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