Charitable Conservation Easement Program Integrity Act of 2021

To amend the Internal Revenue Code of 1986 to limit the charitable deduction for certain qualified conservation contributions. 1. Short title This Act may be cited as the Charitable Conservation Easement Program Integrity Act of 2021 2. Limitation on deduction for qualified conservation contributions made by pass-through entities (a) In general Section 170(h) (7) Limitation on deduction for qualified conservation contributions made by pass-through entities (A) In general A contribution by a partnership (whether directly or as a distributive share of a contribution of another partnership) shall not be treated as a qualified conservation contribution for purposes of this section if the amount of such contribution exceeds 2.5 times the sum of each partner’s relevant basis in such partnership. (B) Relevant basis For purposes of this paragraph— (i) In general The term relevant basis (ii) Modified basis The term modified basis (I) immediately before the contribution described in subparagraph (A), (II) without regard to section 752, and (III) by the partnership after taking into account the adjustments described in subclauses (I) and (II) and such other adjustments as the Secretary may provide. (C) Exception for contributions outside 3-year holding period Subparagraph (A) shall not apply to any contribution which is made at least 3 years after the latest of— (i) the last date on which the partnership that made such contribution acquired any portion of the real property with respect to which such contribution is made, (ii) the last date on which any partner in the partnership that made such contribution acquired any interest in such partnership, and (iii) if the interest in the partnership that made such contribution is held through one or more partnerships— (I) the last date on which any such partnership acquired any interest in any other such partnership, and (II) the last date on which any partner in any such partnership acquired any interest in such partnership. (D) Exception for family partnerships (i) In general Subparagraph (A) shall not apply with respect to any contribution made by any partnership if substantially all of the partnership interests in such partnership are held, directly or indirectly, by an individual and members of the family of such individual. (ii) Members of the family For purposes of this subparagraph, the term members of the family (I) the spouse of such individual, and (II) any individual who bears a relationship to such individual which is described in subparagraphs (A) through (G) of section 152(d)(2). (E) Application to other pass-through entities Except as may be otherwise provided by the Secretary, the rules of this paragraph shall apply to S corporations and other pass-through entities in the same manner as such rules apply to partnerships. (F) Regulations The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this paragraph, including regulations or other guidance— (i) to require reporting, including reporting related to tiered partnerships and the modified basis of partners, and (ii) to prevent the avoidance of the purposes of this paragraph. . (b) Application of accuracy-Related penalties (1) In general Section 6662(b) of such Code is amended by inserting after paragraph (9) the following new paragraph: (10) Any disallowance of a deduction by reason of section 170(h)(7). . (2) Treatment as gross valuation misstatement Section 6662(h)(2) of such Code is amended by striking and , and (D) any disallowance of a deduction described in subsection (b)(10). . (3) No reasonable cause exception Section 6664(c)(2) of such Code is amended by inserting or to any disallowance of a deduction described in section 6662(b)(10) (4) Approval of assessment not required Section 6751(b)(2)(A) of such Code is amended by striking subsection (b)(9) paragraph (9) or (10) of subsection (b) (c) Application of statute of limitations on assessment and collection (1) Extension for certain adjustments made under prior law In the case of any disallowance of a deduction by reason of section 170(h)(7) 2 years 1 year (2) Extension for listed transactions Any contribution described in section 170(h)(7)(A) (d) Application to certain transactions disallowed under other provisions of law In the case of any disallowance of a deduction under section 170 (e) Effective date (1) In general Except as provided in paragraph (2), the amendments made by this section shall apply to contributions made after December 23, 2016, in taxable years ending after such date. (2) Certified historic structures In the case of contributions the conservation purpose (as defined in section 170(h)(4) (3) No inference No inference is intended as to the appropriate treatment of contributions made in taxable years ending on or before the date specified in paragraph (1) or (2), whichever is applicable, or as to any activity not described in section 170(h)(7)

Summary: Charitable Conservation Easement Program Integrity Act of 2021 This bill imposes a limitation on the tax deduction for qualified conservation contributions made by certain partnerships if the amount of the contribution exceeds 2.5% times the sum of each partner's relevant basis in the partnership. This limitation also applies to other pass-thru entities, such as S corporations.