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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 3664 Introduced in Senate (IS)]

111th CONGRESS
  2d Session
                                S. 3664

 To amend the Internal Revenue Code of 1986 to exempt certain farmland 
              from the estate tax, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             July 28, 2010

  Mrs. Feinstein (for herself, Mr. Crapo, Mr. Udall of Colorado, Mr. 
 Bennet, and Mrs. Boxer) 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 farmland 
              from the estate tax, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Family Farm Estate Tax Deferral Act 
of 2010''.

SEC. 2. EXCLUSION FROM GROSS ESTATE OF CERTAIN FARMLAND SO LONG AS 
              FARMLAND USE CONTINUES.

    (a) In General.--Part III of subchapter A of chapter 11 of the 
Internal Revenue Code of 1986 (relating to gross estate) is amended by 
inserting after section 2033 the following new section:

``SEC. 2033A. EXCLUSION OF CERTAIN FARMLAND SO LONG AS USE AS FARMLAND 
              CONTINUES.

    ``(a) In General.--In the case of an estate of a decedent to which 
this section applies, the value of the gross estate shall not include 
the adjusted value of qualified farmland included in the estate.
    ``(b) Estates to Which Section Applies.--This section shall apply 
to an estate if--
            ``(1) the executor elects the application of this section 
        and files an agreement referred to in section 2032A(d)(2),
            ``(2) the decedent was (at the date of the decedent's 
        death) a citizen or resident of the United States,
            ``(3) the decedent for the 3-taxable-year period (10-
        taxable-year period in the case of any qualified farmland which 
        is qualified woodland described in section 2032A(c)(2)(F)(i)) 
        preceding the date of the decedent's death had an average 
        adjusted gross income not exceeding the average adjusted gross 
        income limitation applicable under subparagraphs (A) and (B) of 
        section 1001D(b)(1) of the Food Security Act of 1985 (7 U.S.C. 
        1308-3a(b)(1)) (as in effect on such date),
            ``(4) 50 percent or more of the adjusted value of the gross 
        estate at the date of the decedent's death consists of real or 
        personal property which is used as a farm for farming purposes 
        (within the meaning of section 2032A(e)),
            ``(5) 25 percent or more of the adjusted value of the gross 
        estate consists of the adjusted value of qualified farmland 
        which is real property, and
            ``(6) during the 8-year period ending on the date of the 
        decedent's death there have been periods aggregating 5 years or 
        more during which--
                    ``(A) the qualified farmland which is such real 
                property was owned by the decedent or a member of the 
                decedent's family, and
                    ``(B) there was material participation (within the 
                meaning of section 2032A(e)(6)) by the decedent or a 
                member of the decedent's family in the operation of 
                such farmland.
        Rules similar to the rules of paragraphs (4) and (5) of section 
        2032A(b) shall apply for purposes of subparagraph (B).
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified farmland.--The term `qualified farmland' 
        means any real property which--
                    ``(A) is located in the United States,
                    ``(B) is used as a farm for farming purposes 
                (within the meaning of section 2032A(e)),
                    ``(C) was acquired from or passed from the decedent 
                to a qualified heir of the decedent and which, on the 
                date of the decedent's death, was being so used by the 
                decedent or a member of the decedent's family, and
                    ``(D) is property designated in the agreement filed 
                under subsection (b)(1).
            ``(2) Adjusted value.--The term `adjusted value' means the 
        value of farmland for purposes of this chapter (determined 
        without regard to this section), reduced by any amounts 
        allowable as a deduction in respect to such farmland under 
        paragraph (3) or (4) of section 2053(a).
            ``(3) Other terms.--Any other term used in this section 
        which is also used in section 2032A shall have the same meaning 
        given such term by section 2032A.
    ``(d) Tax Treatment of Dispositions and Failures To Use for Farming 
Purposes.--
            ``(1) Imposition of recapture tax.--If, at any time after 
        the decedent's death and before the death of the qualified 
        heir--
                    ``(A) the qualified heir disposes of any interest 
                in qualified farmland (other than by a disposition to a 
                member of his family), or
                    ``(B) the qualified heir ceases to use the real 
                property which was acquired (or passed) from the 
                decedent as a farm for farming purposes,
        then, there is hereby imposed a recapture tax.
            ``(2) Amount of recapture tax, etc.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), rules similar to the rules of section 
                2032A(c) (other than paragraphs (1) and (2)(E) thereof) 
                with respect to the additional estate tax shall apply 
                for purposes of this subsection with respect to the 
                recapture tax.
                    ``(B) Adjustment of recapture tax to reflect 
                increase in value of farmland.--The amount of the 
                recapture tax otherwise determined under rules 
                described in subparagraph (A) shall be increased by the 
                percentage (if any) by which the value of the interest 
                in the qualified farmland at the time of the imposition 
                of such tax is greater than the adjusted value of such 
                farmland included in the estate.
    ``(e) Application of Other Rules.--Rules similar to the rules of 
subsections (d), (e) (other than paragraph (13) thereof), (f), (g), 
(h), and (i) of section 2032A shall apply for purposes of this 
section.''.
    (b) Application of Lien.--Section 6324B of the Internal Revenue 
Code of 1986 (relating to special lien for additional estate tax 
attributable to farm, etc., valuation) is amended by adding at the end 
the following new subsection:
    ``(e) Application to Qualified Farmland.--
            ``(1) In general.--In the case of any interest in qualified 
        farmland (within the meaning of section 2033A(c)(1)), this 
        section shall apply in the same manner as such section applies 
        to qualified real property.
            ``(2) Form and content.--In addition to any form and 
        content otherwise required by the Secretary with respect to a 
        notice of lien filed against qualified farmland, such notice 
        shall include a statement that such lien is imposed solely for 
        purposes of the estate tax exclusion granted with respect to 
        such qualified farmland under section 2033A.''.
    (c) Woodlands Subject to Management Plan.--Paragraph (2) of section 
2032A(c) of the Internal Revenue Code of 1986 is amended by adding at 
the end the following new subparagraph:
                    ``(F) Exception for woodlands subject to forest 
                stewardship plan.--
                            ``(i) In general.--Subparagraph (E) shall 
                        not apply to any disposition or severance of 
                        standing timber on a qualified woodland that is 
                        made pursuant to a forest stewardship plan 
                        developed under the Cooperative Forestry 
                        Assistance Act of 1978 (16 U.S.C. 2103a) or an 
                        equivalent plan approved by the State Forester.
                            ``(ii) Compliance with forest stewardship 
                        plan.--Clause (i) shall not apply if, during 
                        the 10-year period under paragraph (1), the 
                        qualified heir fails to comply with such forest 
                        stewardship plan or equivalent plan.''.
    (d) Certain Conservation Transactions Not Treated as 
Dispositions.--Paragraph (8) of section 2032A(c) of the Internal 
Revenue Code of 1986 is amended to read as follows:
            ``(8) Certain conservation transactions not treated as 
        dispositions.--
                    ``(A) Qualified conservation contributions.--A 
                qualified conservation contribution by gift or 
                otherwise shall not be deemed a disposition under 
                subsection (c)(1)(A).
                    ``(B) Qualified conservation easement sold to 
                qualified organization.--A sale of a qualified 
                conservation easement to a qualified organization shall 
                not be deemed a disposition under subsection (c)(1)(A).
                    ``(C) Definitions.--For purposes of this 
                paragraph--
                            ``(i) the terms `qualified conservation 
                        contribution' and `qualified organization' have 
                        the meanings given such terms by section 
                        170(h), and
                            ``(ii) the term `qualified conservation 
                        easement' has the meaning given such term by 
                        section 2031(c)(8).''.
    (e) Clerical Amendment.--The table of sections for part III of 
subchapter A of chapter 11 of the Internal Revenue Code of 1986 is 
amended by inserting after the item relating to section 2033 the 
following new item:

``Sec. 2033A. Exclusion of certain farmland so long as use as farmland 
                            continues.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying after the date of the enactment of 
this Act.

SEC. 3. INCREASE IN LIMITATIONS ON THE AMOUNT EXCLUDED FROM THE GROSS 
              ESTATE WITH RESPECT TO LAND SUBJECT TO A QUALIFIED 
              CONSERVATION EASEMENT.

    (a) Increase in Dollar Limitation on Exclusion.--Paragraph (3) of 
section 2031(c) of the Internal Revenue Code of 1986 (relating to 
exclusion limitation) is amended by striking ``the exclusion limitation 
is'' and all that follows and inserting ``the exclusion limitation is 
$5,000,000.''.
    (b) Increase in Percentage of Value of Land Which Is Excludable.--
Paragraph (2) of section 2031(c) of the Internal Revenue Code of 1986 
(relating to applicable percentage) is amended--
            (1) by striking ``40 percent'' and inserting ``50 
        percent'', and
            (2) by striking ``2 percentage points'' and inserting ``2.5 
        percentage points''.
    (c) Effective Date.--The amendments made by this section shall 
apply to the estates of decedents dying after the date of the enactment 
of this Act.
                                 <all>
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