‘‘(B) reserve funds.
‘‘(2) ACQUISITION COSTS.—The term ‘acquisi-
tion costs’ means the sum of—
‘‘(A) the lesser of—
‘‘(i) the total of the amounts that a
qualified conservation organization paid
during the taxable year to acquire qualified
real property interests exclusively for con-
servation purposes, or
‘‘(ii) the aggregate appraised value of
the qualified real property interests re-
ferred to in clause (i), plus
‘‘(B) so much of the transaction costs rea-
sonably incurred during the taxable year in con-
nection with the acquisition of qualified real
property interests as do not exceed 2 percent of
the amount determined in subparagraph (A).
‘‘(3) RESERVE FUNDS.—
‘‘(A) IN
GENERAL.—The term ‘reserve
funds’ means amounts permanently set aside by
a qualified conservation organization as an en-
dowment to fund the future costs of enforcing
and maintaining qualified real property inter-
ests acquired by the qualified conservation orga-
nization exclusively for conservation purposes.
‘‘(B) ENDOWMENT.—The term ‘endow-
ment’ means a restricted fund held in a seg-
regated account, the income and realized appre-
ciation of which may be expended solely for the
purposes designated under this section, and
which may be invested solely in qualified invest-
ments (as defined in section 501(c)(21)(D)(ii)).
‘‘(C) LIMITATION.—The amount of reserve
funds which may be taken into account under
paragraph (1)(B) for the taxable year shall not
exceed 8 percent of the acquisition costs for
that taxable year.
‘‘(c) QUALIFIED CONSERVATION ORGANIZATION.—
For purposes of this section, the term ‘qualified conserva-
tion organization’ means, with respect to any taxable
year—
‘‘(1) an organization which—
‘‘(A) is described in section 170(h)(3),
‘‘(B) has been in existence for at least 2
calendar years immediately before the taxable
year, and
‘‘(C) was organized to serve primarily con-
servation purposes (as defined in section
170(h)(4)),
‘‘(2) a limited partnership, all the general part-
ners of which are organizations described in para-
graph (1), or
‘‘(3) a limited liability company, all the man-
agers of which are organizations described in para-
graph (1),
with respect to which neither the seller of the qualified
real property interest nor any party related or subordinate
to the seller (within the meaning of section 672(c)) would
be a disqualified person (as defined in section 4946) if
the organization were a private foundation.
‘‘(d) QUALIFIED REAL PROPERTY INTEREST.—For
purposes of this section, the term ‘qualified real property
interest’ has the meaning given such term by section
170(h)(2)(C).
‘‘(e) 
EXCLUSIVELY
FOR
CONSERVATION
PUR-
POSES.—For purposes of this section, the term ‘exclusively
for conservation purposes’ has the meaning given such
term by section 170(h)(5), except that an acquisition shall
not be treated as exclusively for conservation purposes un-
less the instrument conveying the qualified real property
interest expressly provides that the conservation purposes
may be enforced by both the attorney general of the State
in which the real property is located and the qualified con-
servation organization.
‘‘(f) APPRAISED VALUE.—For purposes of this sec-
tion, the term ‘appraised value’ means the fair market
value as determined by a qualified appraisal (as defined
in section 155(a)(4) of the Deficit Reduction Act of 1984).
‘‘(g) LIMITATION BASED ON AMOUNT OF TAX.—The
credit allowed under subsection (a) shall not exceed the
taxpayer’s liability for income tax (including unrelated
business income tax) for the taxable year.
‘‘(h) LIMITATION ON AGGREGATE CREDIT ALLOW-
ABLE WITH RESPECT TO ACQUISITIONS OF QUALIFIED
REAL PROPERTY INTERESTS LOCATED IN A STATE.—
‘‘(1) CREDIT
MAY
NOT
EXCEED
CREDIT
AMOUNT ALLOCATED TO ACQUISITION OF QUALIFIED
REAL PROPERTY INTEREST.—
‘‘(A) IN
GENERAL.—The amount of the
credit determined under subsection (a) for any
taxable year with respect to the acquisition of
any qualified real property interest shall not ex-
ceed the conservation credit dollar amount allo-
cated to such acquisition under this subsection.
‘‘(B) TIME FOR MAKING ALLOCATION.—An
allocation shall be taken into account under
subparagraph (A) only if it is made not later
than the close of the calendar year in which the
qualified real property interest is acquired.
‘‘(C) ALLOCATION
REDUCES
AGGREGATE
AMOUNT
AVAILABLE
TO
AGENCY.—Any con-
servation credit dollar amount allocated to the
acquisition of any qualified real property inter-
est for any calendar year shall reduce the ag-
gregate conservation credit dollar amount of the
allocating conservation credit agency for such
calendar year.
‘‘(2) CONSERVATION CREDIT DOLLAR AMOUNT
FOR AGENCIES.—
‘‘(A) IN
GENERAL.—The aggregate con-
servation credit dollar amount which a con-
servation credit agency may allocate for any
calendar year is the portion of the State con-
servation credit ceiling allocated under this
paragraph for such calendar year to such agen-
cy.
‘‘(B) STATE
CEILING
INITIALLY
ALLO-
CATED TO STATE CONSERVATION CREDIT AGEN-
CIES.—Except as provided in subparagraphs
(F) and (G), the State conservation credit ceil-
ing for each calendar year shall be allocated to
the conservation credit agency of such State. If
there is more than 1 conservation credit agency