I 
109TH CONGRESS 
1ST SESSION 
H. R. 658
To amend the Internal Revenue Code of 1986 to exclude from gross income 
gain on the sale or exchange of farmland development rights. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 8, 2005
Mr. PITTS (for himself and Mr. GERLACH) 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 exclude 
from gross income gain on the sale or exchange of farm-
land development rights.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Family Farm Preser-
vation Act of 2005’’. 
SEC. 2. EXCLUSION OF GAIN FROM SALE OF FARMLAND DE-
VELOPMENT RIGHTS. 
(a) GENERAL RULE.—Part III of subchapter B of 
chapter 1 of the Internal Revenue Code of 1986 (relating 
to items specifically excluded from gross income) is
amended by inserting after section 139A the following new 
section: 
‘‘SEC. 139B. SALES AND EXCHANGES OF FARMLAND DEVEL-
OPMENT RIGHTS TO QUALIFIED CONSERVA-
TION ORGANIZATION. 
‘‘(a) GENERAL RULE.—In the case of the owner of 
eligible farmland, gross income does not include gain from 
the sale or exchange of qualified farmland development 
rights to a qualified conservation organization. 
‘‘(b) 
QUALIFIED
FARMLAND
DEVELOPMENT 
RIGHTS.—For purposes of subsection (a)—
‘‘(1) IN GENERAL.—The term ‘qualified farm-
land development rights’ means a restriction (grant-
ed in perpetuity) with respect to eligible farmland 
which does not permit any use of such farmland for 
any purpose other than use as a farm for farming 
purposes (within the meaning of section 2032A(e)) 
or for exclusively conservation purposes (within the 
meaning of section 170(h)(5)). 
‘‘(2) FARM
AND
FARMING
PURPOSES.—The 
terms ‘farm’ and ‘farming purposes’ have the mean-
ings given such terms by section 2032A(e). 
‘‘(3) ELIGIBLE FARMLAND.—The term ‘eligible 
farmland’ means any real property—
‘‘(A) which is located in the United States,
‘‘(B) which is used as a farm for farming 
purposes (within the meaning of section 
2032A(e)), and 
‘‘(C) which is located in a county which 
has a population of 100 or more persons per 
square mile. 
‘‘(c) QUALIFIED CONSERVATION ORGANIZATION.—
For purposes of this section, the term ‘qualified conserva-
tion organization’ means, with respect to any taxable year, 
an organization described in section 170(h)(3) and orga-
nized to serve primarily conservation purposes (as defined 
in section 170(h)(4)). 
‘‘(d) REGULATIONS.—The Secretary may prescribe 
such regulations as may be necessary or appropriate to 
carry out this section, including regulations providing 
for—
‘‘(1) a recapture of the benefit of the exclusion 
from gross income under subsection (a) if the quali-
fied farmland development rights are extinguished in 
a subsequent taxable year, and 
‘‘(2) interest at the underpayment rate estab-
lished under section 6621 on the amount determined 
pursuant to paragraph (1) for each prior taxable 
year for the period beginning on the due date for fil-
ing the return for the prior taxable year involved.
No deduction shall be allowed under this chapter for inter-
est described in paragraph (2).’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for such part is amended by striking the last item and 
inserting the following new item:
‘‘Sec. 139B. Sales and exchanges of farmland development rights to qualified 
conservation organization.’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to sales and exchanges after De-
cember 31, 2005.
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