I

106TH CONGRESS

1ST SESSION H. R. 2263

To amend the Internal Revenue Code of 1986 to encourage contributions

by individuals of capital gain real property for conservation purposes,

to encourage qualified conservation contributions, and to modify the

rules governing the estate tax exclusion for land subject to a qualified

conservation easement.

IN THE HOUSE OF REPRESENTATIVES

JUNE 17, 1999

Mrs. JOHNSON of Connecticut (for herself, Mr. BLUMENAUER, Mr. BEREUTER, and Mr. MALONEY of Connecticut) 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 encourage

contributions by individuals of capital gain real property

for conservation purposes, to encourage qualified conservation contributions, and to modify the rules governing the estate tax exclusion for land subject to a

qualified conservation easement.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
H.L.C.

.....................................................................

(Original Signature of Member)

106TH CONGRESS

1ST SESSION H. R. ll

IN THE HOUSE OF REPRESENTATIVES

Mrs. JOHNSON of Connecticut introduced the following bill; which was referred

to the Committee on lllllllllllllll

A BILL

To amend the Internal Revenue Code of 1986 to encourage

contributions by individuals of capital gain real property

for conservation purposes, to encourage qualified conservation contributions, and to modify the rules governing the estate tax exclusion for land subject to a

qualified conservation easement.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
2

H.L.C.

1 SECTION 1. MODIFICATIONS TO ENCOURAGE CONTRIBU2 TIONS OF CAPITAL GAIN REAL PROPERTY

3 MADE FOR CONSERVATION PURPOSES AND

4 QUALIFIED CONSERVATION CONTRIBUTIONS.

5 (a) CONTRIBUTIONS OF CAPITAL GAIN REAL PROP6 ERTY MADE FOR CONSERVATION PURPOSES AND OF

7 QUALIFIED CONSERVATION CONTRIBUTIONS NOT SUB8 JECT TO SPECIAL LIMITATION ON CONTRIBUTIONS OF

9 CAPITAL GAIN PROPERTY.—Subparagraph (C) of section

10 170(b)(1) of the Internal Revenue Code of 1986 (relating

11 to special limitation with respect to contributions de12 scribed in subparagraph (A) of capital gain property) is

13 amended by redesignating clause (iv) as clause (v) and by

14 inserting after clause (iii) the following new clause:

15 ‘‘(iv) In the case of charitable con16 tributions described in subparagraph (A)

17 of capital gain property, clauses (i) and (ii)

18 shall not apply to—

19 ‘‘(I) any qualified conservation

20 contribution (as defined in section

21 170(h)), or

22 ‘‘(II) any other contribution of

23 capital gain property which is real

24 property if the contribution is of the

25 donor’s entire interest in such prop26 erty and is to a qualified organization
3

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1 (as defined in section 170(h)(3))

2 which is organized for conservation

3 purposes (as defined in section

4 170(h)(4)(A)) and which provides the

5 taxpayer, at the time of such dona6 tion, a letter of intent which contains

7 an acknowledgment of the donee’s in8 tent that the property is being ac9 quired for any such conservation pur10 pose.’’.

11 (b) UNLIMITED CARRYOVER FOR CONTRIBUTIONS OF

12 CAPITAL GAIN REAL PROPERTY FOR CONSERVATION

13 PURPOSES AND OF QUALIFIED CONSERVATION CON14 TRIBUTIONS OF CAPITAL GAIN PROPERTY.—Paragraph

15 (1) of section 170(d) of such Code in amended by adding

16 at the end the following new subparagraph:

17 ‘‘(C) UNLIMITED CARRYOVER FOR CON18 TRIBUTIONS OF CAPITAL GAIN REAL PROPERTY

19 FOR CONSERVATION PURPOSES AND OF QUALI20 FIED CONSERVATION CONTRIBUTIONS OF CAP21 ITAL GAIN PROPERTY.—The 5 taxable year lim22 itation in subparagraph (A) shall not apply to

23 any charitable contribution to which clauses (i)

24 and (ii) of subsection (b)(1)(C) do not apply by

25 reason of clause (iv) thereof. For purposes of
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1 this paragraph, the excess described in the ma2 terial preceding clause (i) of subparagraph (A)

3 shall be treated as attributable to contributions

4 described in the preceding sentence of this sub5 paragraph to the extent of such contributions.’’.

6 (c) EFFECTIVE DATE.—The amendment made by

7 this section shall apply to contributions made in taxable

8 years beginning after the date of the enactment of this

9 Act.

10 SEC. 2. MODIFICATION OF RULES RELATING TO ESTATE

11 TAX EXCLUSION FOR LAND SUBJECT TO

12 QUALIFIED CONSERVATION EASEMENT.

13 (a) REPEAL OF CERTAIN RESTRICTIONS ON WHERE

14 LAND IS LOCATED.—Clause (i) of section 2031(c)(8)(A)

15 of the Internal Revenue Code of 1986 is amended to read

16 as follows:

17 ‘‘(i) which is located in the United

18 States or any possession of the United

19 States,’’.

20 (b) REPEAL OF LIMITATION ON EXCLUSION.—

21 (1) IN GENERAL.—Paragraph (1) of section

22 2031(c) of such Code is amended by striking ‘‘the

23 lesser of—’’ and all that follows and inserting ‘‘the

24 applicable percentage of the value of land subject to

25 a qualified conservation easement, reduced by the
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1 amount of any deduction under section 2055(f) with

2 respect to such land.’’

3 (2) CONFORMING AMENDMENTS.—

4 (A) Subsection (c) of section 2031 of such

5 Code is amended by striking paragraph (3) and

6 by redesignating paragraphs (4) through (10)

7 as paragraphs (3) through (9), respectively.

8 (B) Paragraphs (2) and (6) of section

9 2031(c) of such Code, as redesignated by sub10 paragraph (A), are each amended by striking

11 ‘‘paragraph (5)’’ and inserting ‘‘paragraph

12 (4)’’.

13 (C) Paragraphs (1), (6), and (7)(A)(iii) of

14 section 2031(c) of such Code, as redesignated

15 by subparagraph (A), are each amended by

16 striking ‘‘paragraph (6)’’ and inserting ‘‘para17 graph (5)’’.

18 (c) DATE FOR DETERMINING VALUE OF LAND AND

19 EASEMENT.—Paragraph (2) of section 2032(c) of such

20 Code (defining applicable percentage) is amended by add21 ing at the end the following new sentence: ‘‘The values

22 taken into account under the preceding sentence shall be

23 such values as of the date of the contribution referred to

24 in paragraph (7)(B).’’
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1 (d) CERTAIN COMMERCIAL RECREATIONAL USES

2 PERMITTED.—Subparagraph (B) of section 2031(c)(7) of

3 such Code, as redesignated by subsection (b), is amended

4 to read as follows:

5 ‘‘(B) QUALIFIED CONSERVATION EASE6 MENT.—

7 ‘‘(i) IN GENERAL.—The term ‘quali8 fied conservation easement’ means a quali9 fied conservation contribution (as defined

10 in section 170(h)(1)) of a qualified real

11 property interest (as defined in section

12 170(h)(2)(C)), except that clause (iv) of

13 section 170(h)(4)(A) shall not apply, and

14 the restriction on the use of such interest

15 described in section 170(h)(2)(C) shall in16 clude a prohibition on more than a de

17 minimis use for a commercial recreational

18 activity.

19 ‘‘(ii) SPECIAL RULES.—For purposes

20 of this paragraph—

21 ‘‘(I) RETAINED RIGHTS.—Rights

22 retained in the conservation easement

23 to lease the land for hunting and fish24 ing, so long as such leases are not in25 consistent with the conservation pur-
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1 pose of the easement, shall be deemed

2 to be de minimis use.

3 ‘‘(II) PRE-EFFECTIVE DATE

4 EASEMENTS.—Easements otherwise

5 qualifying under the provisions of this

6 subsection that were donated on or

7 before the date of the enactment of

8 this subclause, shall be deemed to

9 allow no more than de minimis use for

10 a commercial recreational activity un11 less by their terms they expressly pro12 vide for commercial recreational activ13 ity in excess of that otherwise allowed

14 by this subparagraph.

15 ‘‘(III) AUTHORITY TO EXTIN16 GUISH RIGHT OF COMMERCIAL RECRE17 ATION ACTIVITY.—For purposes of

18 this section, if the executor of an es19 tate and every person in being who

20 has an interest in the land execute an

21 agreement to amend or extinguish any

22 right under the easement of commer23 cial recreation activity in the land so

24 as to ensure that such land is used for

25 no more than de minimis commercial
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1 recreational activity, such agreement

2 shall be treated as in effect as of the

3 date of the election described in para4 graph (5).’’

5 (e) EXCLUSION APPLICABLE TO SOLD EASE6 MENTS.—Clause (i) of section 2031(c)(7) of such Code,

7 as amended by subsection (d), is amended by adding at

8 the end the following new sentence: ‘‘A transfer for value

9 of a qualified real property interest (as defined under sec10 tion 170(h)(2)(C)) shall not fail to be treated as a quali11 fied conservation easement if such interest would meet the

12 requirements of the preceding sentence were it donated to

13 the purchaser and any reference in this section to a con14 tribution shall be treated as including a reference to such

15 a transfer.’’

16 (f) EFFECTIVE DATE.—The amendments made by

17 this section shall take effect as if included in the amend18 ments made by section 508 of the Taxpayer Relief Act

19 of 1997.

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