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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2031 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 2031

 To amend the Internal Revenue Code of 1986 to provide an election to 
exclude from the gross estate the value of land subject to a qualified 
conservation easement if certain conditions are satisfied, to permit a 
 qualified conservation contribution where the probability of surface 
mining is remote and to make technical changes to alternative valuation 
                                 rules.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              May 6, 1993

 Mr. Payne of Virginia (for himself, Mr. Wolf, Mr. Coyne, Mrs. Johnson 
of Connecticut, Mr. Andrews of Texas, and Mr. Sundquist) 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 provide an election to 
exclude from the gross estate the value of land subject to a qualified 
conservation easement if certain conditions are satisfied, to permit a 
 qualified conservation contribution where the probability of surface 
mining is remote and to make technical changes to alternative valuation 
                                 rules.

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

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Rural Land 
Conservation Act of 1993''.
    (b) Amendment of 1986 Code.--Except as otherwise provided, whenever 
in this Act an amendment or repeal is expressed in terms of an 
amendment to, or repeal of, a section or provision, the reference shall 
be considered to be made to a section or other provision of the 
Internal Revenue Code of 1986.

SEC. 2. TREATMENT OF LAND SUBJECT TO A QUALIFIED CONSERVATION EASEMENT.

    (a) Estate Tax With Respect to Land Subject to a Qualified 
Conservation Easement.--Section 2031 of the Internal Revenue Code of 
1986 (relating to the definition of gross estate) is amended by 
redesignating subsection (c) as subsection (d) and by inserting after 
subsection (b) the following new subsection:
    ``(c) Estate Tax With Respect to Land Subject to a Qualified 
Conservation Easement.--(1) In General.--If the executor makes the 
election described in paragraph (3) of this subsection, then, except as 
otherwise provided in this subsection, there shall be excluded from the 
gross estate the value of land subject to a qualified conservation 
easement (reduced by the amount of any indebtedness to which such land 
is subject). For purposes of this subsection, the term `land subject to 
a qualified conservation easement' shall mean land that is located in 
or within fifty miles of an area which, on the date of the decedent's 
death, is a metropolitan area (as defined by the Office of Management 
and Budget) or a National Park (unless it is determined by the 
Secretary that land in or within fifty miles of such a Park is not 
under significant development pressure), and which was owned by the 
decedent or a member of the decedent's family at all times during the 
three-year period ending on the date of the decedent's death, and with 
respect to which a qualified conservation contribution of a qualified 
real property interest (as defined in section 170(h)(1) and (2)(C)) is 
or has been made by the decedent or a member of the decedent's family. 
For purposes of this subsection, the term `qualified real property 
interest' shall not include any structure or building constituting a 
`certified historic structure' (as defined in section 170(h)(4)(B)) or 
within the definition of a `historically important land area' (as 
defined in section 170(h)(4)(A)(iv)). For purposes of this subsection, 
the term `member of the decedent's family' shall have the same meaning 
as the term `member of the family' in section 2032A.
    ``(2) Payment of Tax Upon Certain Disposition of Land Subject to 
Retained Development Right.--The exclusion described in paragraph (1) 
shall not apply to the value of any development right retained by the 
donor in the conveyance of such qualified conservation easement. The 
tax imposed by section 2001, if any, attributable to any development 
right so retained shall be imposed only upon the disposition of such 
property. For purposes of this paragraph, the term `disposition' shall 
not include any gift or devise. The tax so imposed shall be due and 
payable by the person so disposing of such property on the fifteenth 
day of the fourth month following the calendar year in which such 
disposition occurs. For purposes of this paragraph, the term 
`development right' shall mean the right to establish or use, any 
structure and the land immediately surrounding it for sale, or for rent 
or any other commercial purpose which is not subordinate to and 
directly supportive of the conservation purpose identified in the 
easement, or the activity of farming, forestry, ranching, horticulture, 
viticulture, or recreation, whether or not for profit, conducted on 
land subject to the easement in which such right is retained.
    ``(3) Election With Respect to Land Subject to Qualified 
Conservation Easement.--The election under this subsection shall be 
made on the return of the tax imposed by section 2001 and in such 
manner as the Secretary shall by regulations prescribe. Such an 
election, once made, shall be irrevocable.
    ``(4) Calculation and Notice of Potential Estate Tax Due.--An 
executor making the election described in paragraph (3) of this 
subsection shall compute the amount of tax imposed by section 2001 upon 
any development right (as defined in paragraph (2) of this subsection) 
retained by the donor in the conveyance of such qualified conservation 
easement and include such computation with the return of the tax 
imposed by section 2001. The executor shall also file a `Notice of 
Potential Estate Tax Due' in the place or places where deeds are put to 
public record for the locality in which the land subject to such 
qualified conservation easement is located. The report of the 
computation of tax on any retained development right and the filing of 
the notice prescribed in this paragraph shall be done in such manner 
and on such forms as the Secretary shall prescribe.''
    (b) Carryover Basis.--Section 1014(a) of the Internal Revenue Code 
of 1986 (relating to basis of property acquired from a decedent) is 
amended by striking the period at the end of paragraph (3), inserting 
``, or'' at the end thereof, and inserting the following new paragraph:
            ``(4) to the extent of the applicability of the exclusion 
        described in section 2031(c), the basis in the hands of the 
        decedent.''
    (c) Effective Date.--The amendments made by this section shall 
apply to gross estates including land on which qualified conservation 
easements were granted after December 31, 1992, in taxable years ending 
after such date.

SEC. 3. GIFT TAX ON LAND SUBJECT TO A QUALIFIED CONSERVATION EASEMENT.

    (a) Gift Tax With Respect to Land Subject to a Qualified 
Conservation Easement.--Section 2503 of the Internal Revenue Code of 
1986 (relating to taxable gifts) is amended by adding a new subsection 
(h) to read as follows:
    ``(h) Gift Tax With Respect to Land Subject to a Qualified 
Conservation Easement.--The transfer by gift of land subject to a 
qualified conservation easement shall not be treated as a transfer of 
property by gift for purposes of this chapter. For purposes of this 
subsection, the term `land subject to a qualified conservation 
easement' shall have the same meaning as in section 2031(c), except 
that references therein to `decedent' shall refer to the donor and 
references to `the date of the decedent's death' shall refer to the 
date of the transfer by the donor.''
    (b) Effective Date.--The amendments made by this section shall 
apply to gifts of land on which qualified conservation easements were 
granted after December 31, 1992, in taxable years ending after such 
date.

SEC. 4. QUALIFIED CONSERVATION CONTRIBUTION WHERE SURFACE AND MINERAL 
              RIGHTS ARE SEPARATED.

    (a) In General.--Section 170(h)(5)(B)(ii) of the Internal Revenue 
Code of 1986 (relating to special rule) is amended to read as follows:
                            ``(ii) Special rule.--With respect to any 
                        contribution of property in which the ownership 
                        of the surface estate and mineral interests has 
                        been and remains separated, subparagraph (A) 
                        shall be treated as met if the probability of 
                        surface mining occurring on such property is so 
                        remote as to be negligible.''
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to contributions made after December 31, 1992, in taxable 
years ending after such date.

SEC. 5. QUALIFIED CONSERVATION CONTRIBUTION IS NOT A DISPOSITION.

    (a) Qualified Conservation Contribution Is Not a Disposition.--
Subsection (c) of section 2032A of the Internal Revenue Code of 1986 
(relating to alternative valuation method) is amended by adding at the 
end thereof the following paragraph:
            ``(8) Qualified conservation contribution is not a 
        disposition.--A qualified conservation contribution (as defined 
        in section 170(h)) by gift or otherwise shall not be deemed a 
        disposition under subparagraph (c)(1)(A) of this section. If 
        qualified real property is land subject to a qualified 
        conservation easement (as defined in section 2031(c)), 
        subsections (c)(1)-(7) of this section shall not apply.''
    (b) Land Subject to a Qualified Conservation Easement Is Not 
Disqualified.--Subsection (b)(1) of section 2032A of the Internal 
Revenue Code of 1986 (relating to alternative valuation method) is 
amended by adding at the end thereof the following paragraph:
                    ``(E) If property is otherwise qualified real 
                property, the fact that it is land subject to a 
                qualified conservation easement shall not disqualify it 
                under this section.''

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