(7) EFFECTIVE
DATE.—This subsection shall 
apply to obligations issued on or after the date 
which is 180 days after the enactment of this Act. 
(b) ITEMS FROM QUALIFIED HARVESTING ACTIVI-
TIES NOT SUBJECT TO TAX OR TAKEN INTO ACCOUNT.— 
(1) IN GENERAL.—Income, gains, deductions, 
losses, or credits from a qualified harvesting activity 
conducted by a qualified organization shall not be 
subject to tax or taken into account under subtitle 
A of the Internal Revenue Code of 1986. 
(2) LIMITATION.—The amount of income ex-
cluded from gross income under paragraph (1) for 
any taxable year shall not exceed the amount used 
by the qualified organization to make debt service 
payments during such taxable year for qualified for-
est conservation bonds. 
(3) QUALIFIED
HARVESTING
ACTIVITY.—For 
purposes of paragraph (1)— 
(A) IN
GENERAL.—The term ‘‘qualified 
harvesting activity’’ means the sale, lease, or 
harvesting, of standing timber— 
(i) on land owned by a qualified orga-
nization which was acquired with proceeds 
of qualified forest conservation bonds, and 
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(ii) pursuant to a qualified conserva-
tion plan adopted by the qualified organi-
zation. 
(B) EXCEPTIONS.— 
(i) CESSATION AS QUALIFIED ORGANI-
ZATION.—The term ‘‘qualified harvesting 
activity’’ shall not include any sale, lease, 
or harvesting for any period during which 
the organization ceases to qualify as a 
qualified organization. 
(ii) EXCEEDING
LIMITS
ON
HAR-
VESTING.—The term ‘‘qualified harvesting 
activity’’ shall not include any sale, lease, 
or harvesting of standing timber on land 
acquired with proceeds of qualified forest 
conservation bonds to the extent that— 
(I) the average annual area of 
timber harvested from such land ex-
ceeds 2.5 percent of the total area of 
such land, or 
(II) the quantity of timber re-
moved from such land exceeds the 
quantity which can be removed from 
such land annually in perpetuity on a 
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sustained-yield basis with respect to 
such land. 
The limitations under subclauses (I) and 
(II) shall not apply to post-fire restoration 
and rehabilitation or sanitation harvesting 
of timber stands which are substantially 
damaged by fire, windthrow, or other ca-
tastrophes, or which are in imminent dan-
ger from insect or disease attack. 
(4) TERMINATION.—This subsection shall not 
apply to any qualified harvesting activity of a quali-
fied organization occurring after the date on which 
there is no outstanding qualified forest conservation 
bond with respect to such qualified organization or 
any such bond ceases to be a tax-exempt bond. 
(5) PARTIAL RECAPTURE OF BENEFITS IF HAR-
VESTING LIMIT EXCEEDED.—If, as of the date that 
this subsection ceases to apply under paragraph (3), 
the average annual area of timber harvested from 
the land exceeds the requirement of subclause (I) or 
(II) of paragraph (3)(B)(ii), the tax imposed by 
chapter 1 of the Internal Revenue Code of 1986 
shall be increased, under rules prescribed by the 
Secretary of the Treasury, by the sum of the tax 
benefits attributable to such excess and interest at 
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the underpayment rate under section 6621 of such 
Code for the period of the underpayment. 
(c) DEFINITIONS.—For purposes of this section— 
(1) QUALIFIED
CONSERVATION
PLAN.—The 
term ‘‘qualified conservation plan’’ means a multiple 
land use program or plan which— 
(A) is designed and administered primarily 
for the purposes of protecting and enhancing 
wildlife and fish, timber, scenic attributes, 
recreation, and soil and water quality of the 
forest and forest land, 
(B) mandates that conservation of forest 
and forest land is the single-most significant 
use of the forest and forest land, and 
(C) requires that timber harvesting be con-
sistent with— 
(i) restoring and maintaining ref-
erence conditions for the region’s ecotype, 
(ii) restoring and maintaining a rep-
resentative sample of young, mid, and late 
successional forest age classes, 
(iii) maintaining or restoring the re-
sources’ ecological health for purposes of 
preventing damage from fire, insect, or dis-
ease, 
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(iv) maintaining or enhancing wildlife 
or fish habitat, or 
(v) enhancing research opportunities 
in sustainable renewable resource uses. 
(2) CONSERVATION
RESTRICTION.—The con-
servation restriction described in this paragraph is a 
restriction which— 
(A) is granted in perpetuity to an unre-
lated person which is described in section 
170(h)(3) of such Code and which, in the case 
of a nongovernmental unit, is organized and op-
erated for conservation purposes, 
(B) meets the requirements of clause (ii) 
or (iii)(II) of section 170(h)(4)(A) of such 
Code, 
(C) obligates the qualified organization to 
pay the costs incurred by the holder of the con-
servation restriction in monitoring compliance 
with such restriction, and 
(D) requires an increasing level of con-
servation benefits to be provided whenever cir-
cumstances allow it. 
(3) 
QUALIFIED
ORGANIZATION.—The 
term 
‘‘qualified organization’’ means an organization— 
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(A) more than half of the value of the 
property of which consists of forests and forest 
land acquired with the proceeds from qualified 
forest conservation bonds, 
(B) which periodically conducts educational 
programs designed to inform the public of envi-
ronmentally sensitive forestry management and 
conservation techniques, 
(C) which has at all times a board of direc-
tors— 
(i) at least 20 percent of the members 
of which are representatives of the con-
servation community, 
(ii) at least 20 percent of the mem-
bers of which are public officials, and 
(iii) not more than one-third of the 
members of which are individuals who are 
or were at any time within 5 years before 
the beginning of a term of membership on 
the board, an employee of, independent 
contractor with respect to, officer of, direc-
tor of, or held a material financial interest 
in, a commercial forest products enterprise 
with which the qualified organization has a 
contractual or other financial arrangement, 
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