I
104TH CONGRESS
1ST SESSION
H. R. 2423
To amend the Internal Revenue Code of 1986 to provide an estate tax
credit with respect to property managed according to certain habitat
conservation agreements, to provide a credit for certain conservation
expenses, and to exclude from income amounts received from others
to pay for such expenses.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 28, 1995
Mr. SAXTON
(for himself, Mr. EWING, Mr. MCCOLLUM, and Mr.
THORNBERRY) 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 estate tax credit with respect to property managed
according to certain habitat conservation agreements, to
provide a credit for certain conservation expenses, and
to exclude from income amounts received from others
to pay for such expenses.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. ESTATE TAX DEFERRAL IF REAL PROPERTY
MANAGED ACCORDING TO HABITAT CON-
SERVATION AGREEMENT.
(a) IN GENERAL.—Part IV of subchapter A of chap-
ter 11 of the Internal Revenue Code of 1986 (relating to
tax imposed) is amended by adding at the end the follow-
ing new section:
‘‘SEC. 2057. EXCLUSION OF REAL PROPERTY MANAGED
UNDER 
HABITAT 
CONSERVATION 
AGREE-
MENT.
‘‘(a) IN GENERAL.—If the executor elects the appli-
cation of this section and files the agreement referred to
in subsection (b), then for purposes of the tax imposed
by section 2001 the value of the taxable estate shall be
determined by deducting from the value of the gross estate
an amount equal to the value of the qualified real property
of the decedent included in determining the gross estate.
‘‘(b) QUALIFIED REAL PROPERTY.—For purposes of
this section, the term ‘qualified real property’ means real
property with respect to which each owner has entered
into an agreement—
‘‘(1) with the Secretary of the Interior or the
Secretary of Commerce, under which each owner
agrees to maintain the property in accordance with
habitat conservation concerns, as determined by the
agreement, or
‘‘(2) with a State environmental agency, under
which each owner agrees to so maintain the prop-
erty, if the agreement is approved by the Secretary
of the Interior or the Secretary of Commerce.
‘‘(c) RECAPTURE.—
‘‘(1) DISPOSITION
OF
INTEREST, MATERIAL
BREACH, OR TERMINATION.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (C), if—
‘‘(i) any owner disposes of any inter-
est in the property to which subsection (a)
applies, or
‘‘(ii) there is a material breach or ter-
mination by any owner of any agreement
described in subsection (b) with respect to
such property,
then there is hereby imposed an additional tax.
‘‘(B) AMOUNT OF TAX.—The amount of
the tax imposed by subparagraph (A) with re-
spect to any property shall equal the sum of—
‘‘(i) the difference between—
‘‘(I) the amount of the tax im-
posed by section 2001 on the estate of
the decedent, and
‘‘(II) the amount of tax which
would have been so imposed if the
value of real property excluded under
subsection (a) had been included in
the gross estate at the fair market
value applicable at the time of the dis-
position, breach, or termination re-
ferred to in subparagraph (A), and
‘‘(ii) if the disposition, breach, or ter-
mination referred to in subparagraph (A)
occurs during the 2-year period beginning
on the date of the death of the decedent
referred to subsection (a), interest on the
amount described in clause (i), determined
using the underpayment rate established
under section 6621, for the period begin-
ning on the due date of the return of the
tax imposed by section 2001 (determined
without regard to any extension) and end-
ing on the date of the payment of the addi-
tional tax under this paragraph.
‘‘(C) EXCEPTION
IF
TRANSFEREE
AS-
SUMES
OBLIGATIONS
OF
TRANSFEROR.—Sub-
paragraph (A)(i) shall not apply to a disposition
by an owner if the owner (or his estate) and the
transferee of the property enter into a written
agreement under which the transferee agrees—
‘‘(i) to assume the obligations imposed
on the owner under the agreement de-
scribed in subsection (b),
‘‘(ii) to assume liability for any tax
imposed under subparagraph (A) with re-
spect to any future transfers or breaches
by such transferee, and
‘‘(iii) to notify the Secretary of the In-
terior or the Secretary of Commerce
(whichever is applicable) and the Secretary
that the transferee has assumed the obliga-
tions and liabilities described in clauses (i)
and (ii).
If an owner and a transferee enter into an
agreement described in clauses (i), (ii), and
(iii), such transferee shall be treated for pur-
poses of this section as having entered into an
agreement described in subsection (b).
‘‘(2) STATUTE OF LIMITATIONS.—If a taxpayer
incurs a tax liability pursuant to paragraph (1),
then—
‘‘(A) the statutory period for the assess-
ment of any additional tax imposed by para-
graph (1) shall not expire before the expiration
of 3 years from the date the Secretary is noti-
fied (in such manner as the Secretary may by
regulation prescribe) of the incurring of such
tax liability, and
‘‘(B) such additional tax may be assessed
before the expiration of such 3-year period not-
withstanding the provisions of any other law or
rule of law that would otherwise prevent such
assessment.
‘‘(d) OWNER.—For purposes of this section, the term
‘owner’ means a person in being who has an interest
(whether or not in possession) in real property.
‘‘(e) ELECTION AND FILING OF AGREEMENT.—
‘‘(1) ELECTION.—The election under this sec-
tion shall be made on the return of the tax imposed
by section 2001. Such election shall be made in such
manner as the Secretary shall by regulation provide.
‘‘(2) AGREEMENT.—The agreement described
in subsection (b) shall be filed in such manner as the
Secretary shall by regulation prescribe.’’
(b) CLERICAL AMENDMENT.—The table of sections
for part II of subchapter A of chapter 11 of such Code
is amended by adding at the end the following new item:
‘‘Sec. 2017. Credit if real property managed under habitat con-
servation agreement.’’
(c) EFFECTIVE DATE.—The amendments made by
this Act shall apply to the estates of decedents dying after
the date of the enactment of this Act.
SEC. 2. CREDIT FOR CERTAIN CONSERVATION EXPENSES.
(a) IN GENERAL.—Subpart B of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by adding at the end the following new
section:
‘‘SEC. 30A. CREDIT FOR CONSERVATION EXPENSES.
‘‘(a) IN GENERAL.—There shall be allowed as a cred-
it against the tax imposed by this chapter for the taxable
year an amount equal to the applicable conservation ex-
pense amount for the taxable year.
‘‘(b) 
APPLICABLE
CONSERVATION
EXPENSE
AMOUNT.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘applicable con-
servation expense amount’ means, with respect to
qualified conservation expenses paid or incurred by
the taxpayer during the taxable year—
‘‘(A) such qualified conservation expenses,
if the out-of-pocket expenses of the taxpayer are
50 percent or more of such qualified conserva-
tion expenses, or
‘‘(B) the out-of-pocket expenses of the tax-
payer, if the out-of-pocket expenses are less
than 50 percent of such qualified conservation
expenses.
‘‘(2) OUT-OF-POCKET
EXPENSES.—The term
‘out-of-pocket expenses’ means, with respect to
qualified conservation expenses paid or incurred by
the taxpayer during the taxable year, the excess of—
‘‘(A) such qualified conservation expenses,
over
‘‘(B) the amount of any grant to the tax-
payer which is—
‘‘(i) made for the purpose of paying
such qualified conservation expenses, and
‘‘(ii) excludable from income.
‘‘(c) QUALIFIED CONSERVATION EXPENSES.—For
purposes of this section—
‘‘(1) IN
GENERAL.—The term ‘qualified con-
servation expenses’ means, with respect to any real
property, expenses paid or incurred for—
‘‘(A) any action taken pursuant to a quali-
fied conservation agreement for such property,
or
‘‘(B) any qualified conservation activity.
‘‘(2) QUALIFIED
CONSERVATION
ACTIVITY.—
The term ‘qualified conservation activity’ means any
activity so designated for purposes of this paragraph
by the Director of the United States Fish and Wild-
life Service or the Administrator of the National Ma-
rine Fisheries Service.
‘‘(3) 
QUALIFIED
CONSERVATION
AGREE-
MENT.—The term ‘qualified conservation agreement’
means an agreement described in section 2057(b).
‘‘(d) LIMITATION.—The credit allowed under this sec-
tion for any taxable year may not exceed $1,500.
‘‘(e) CARRYFORWARD OR UNUSED CREDIT.—If the
credit allowable under subsection (a) for any taxable year
exceeds the limitation imposed by section 26(a) for such
taxable year reduced by the sum of the credits allowable
under subpart A and this subpart (other than this sec-
tion), such excess shall be carried to the succeeding tax-
able year and added to the credit allowable under sub-
section (a) for such succeeding taxable year up to 10
years.
‘‘(f) DENIAL OF DOUBLE BENEFIT.—No deduction
may be allowed under this chapter for any expense for
which a credit is allowed under this section.
(b) CLERICAL AMENDMENT.—The table of sections
for subpart B of part IV of subchapter A of chapter 1
of such Code is amended by adding at the end the follow-
ing new item:
‘‘Sec. 30A. Credit for conservation expenses.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to expenses paid or incurred after
the date of the enactment of this Act.
SEC. 3. EXCLUSION FROM INCOME OF GRANTS MADE FOR
QUALIFIED CONSERVATION EXPENSES.
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended
by redesignating section 137 as section 138 and by insert-
ing after section 136 the following new section:
‘‘SEC. 137. GRANTS MADE FOR QUALIFIED CONSERVATION
EXPENSES.
‘‘(a) IN GENERAL.—Gross income shall not include
the amount of any grant which is—
(1) made to the taxpayer for the purpose of
paying, during the taxable year, qualified conserva-
tion expenses with respect to real property owned by
the taxpayer, and
(2) used by the taxpayer to pay such expenses.
‘‘(b) QUALIFIED CONSERVATION EXPENSES.—For
purposes of this section, the term ‘qualified conservation
expenses’ has the meaning given such term by section
30A(d).’’
(b) CLERICAL AMENDMENT.—The table of sections
for part III of subchapter B of chapter 1 of such Code