I
103D CONGRESS
1ST SESSION
H. R. 2031
To amend the Internal Revenue Code of 1986 to provide an election to
exclude from the gross estate the value of land subject to a qualified
conservation easement if certain conditions are satisfied, to permit a
qualified conservation contribution where the probability of surface min-
ing is remote and to make technical changes to alternative valuation
rules.
IN THE HOUSE OF REPRESENTATIVES
MAY 6, 1993
Mr. PAYNE of Virginia (for himself, Mr. WOLF, Mr. COYNE, Mrs. JOHNSON
of Connecticut, Mr. ANDREWS of Texas, and Mr. SUNDQUIST) 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 election to exclude from the gross estate the value
of land subject to a qualified conservation easement if
certain conditions are satisfied, to permit a qualified
conservation contribution where the probability of surface
mining is remote and to make technical changes to alter-
native valuation rules.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
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SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Rural Land Conservation Act of 1993’’.
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise provided, whenever in this Act an amendment or re-
peal is expressed in terms of an amendment to, or repeal
of, a section or provision, the reference shall be considered
to be made to a section or other provision of the Internal
Revenue Code of 1986.
SEC. 2. TREATMENT OF LAND SUBJECT TO A QUALIFIED
CONSERVATION EASEMENT.
(a) ESTATE TAX WITH RESPECT TO LAND SUBJECT
TO
A QUALIFIED CONSERVATION EASEMENT.—Section
2031 of the Internal Revenue Code of 1986 (relating to
the definition of gross estate) is amended by redesignating
subsection (c) as subsection (d) and by inserting after sub-
section (b) the following new subsection:
‘‘(c) ESTATE TAX WITH RESPECT TO LAND SUB-
JECT TO A QUALIFIED CONSERVATION EASEMENT.—(1)
IN GENERAL.—If the executor makes the election de-
scribed in paragraph (3) of this subsection, then, except
as otherwise provided in this subsection, there shall be ex-
cluded from the gross estate the value of land subject to
a qualified conservation easement (reduced by the amount
of any indebtedness to which such land is subject). For
purposes of this subsection, the term ‘land subject to a
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qualified conservation easement’ shall mean land that is
located in or within fifty miles of an area which, on the
date of the decedent’s death, is a metropolitan area (as
defined by the Office of Management and Budget) or a
National Park (unless it is determined by the Secretary
that land in or within fifty miles of such a Park is not
under significant development pressure), and which was
owned by the decedent or a member of the decedent’s fam-
ily at all times during the three-year period ending on the
date of the decedent’s death, and with respect to which
a qualified conservation contribution of a qualified real
property interest (as defined in section 170(h)(1) and
(2)(C)) is or has been made by the decedent or a member
of the decedent’s family. For purposes of this subsection,
the term ‘qualified real property interest’ shall not include
any structure or building constituting a ‘certified historic
structure’ (as defined in section 170(h)(4)(B)) or within
the definition of a ‘historically important land area’ (as
defined in section 170(h)(4)(A)(iv)). For purposes of this
subsection, the term ‘member of the decedent’s family’
shall have the same meaning as the term ‘member of the
family’ in section 2032A.
‘‘(2) PAYMENT OF TAX UPON CERTAIN DISPOSITION
OF
LAND
SUBJECT
TO
RETAINED
DEVELOPMENT
RIGHT.—The exclusion described in paragraph (1) shall
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not apply to the value of any development right retained
by the donor in the conveyance of such qualified conserva-
tion easement. The tax imposed by section 2001, if any,
attributable to any development right so retained shall be
imposed only upon the disposition of such property. For
purposes of this paragraph, the term ‘disposition’ shall not
include any gift or devise. The tax so imposed shall be
due and payable by the person so disposing of such prop-
erty on the fifteenth day of the fourth month following
the calendar year in which such disposition occurs. For
purposes of this paragraph, the term ‘development right’
shall mean the right to establish or use, any structure and
the land immediately surrounding it for sale, or for rent
or any other commercial purpose which is not subordinate
to and directly supportive of the conservation purpose
identified in the easement, or the activity of farming, for-
estry, ranching, horticulture, viticulture, or recreation,
whether or not for profit, conducted on land subject to
the easement in which such right is retained.
‘‘(3) ELECTION WITH RESPECT TO LAND SUBJECT
TO QUALIFIED CONSERVATION EASEMENT.—The election
under this subsection shall be made on the return of the
tax imposed by section 2001 and in such manner as the
Secretary shall by regulations prescribe. Such an election,
once made, shall be irrevocable.
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‘‘(4) CALCULATION AND NOTICE OF POTENTIAL ES-
TATE TAX DUE.—An executor making the election de-
scribed in paragraph (3) of this subsection shall compute
the amount of tax imposed by section 2001 upon any de-
velopment right (as defined in paragraph (2) of this sub-
section) retained by the donor in the conveyance of such
qualified conservation easement and include such com-
putation with the return of the tax imposed by section
2001. The executor shall also file a ‘Notice of Potential
Estate Tax Due’ in the place or places where deeds are
put to public record for the locality in which the land sub-
ject to such qualified conservation easement is located.
The report of the computation of tax on any retained de-
velopment right and the filing of the notice prescribed in
this paragraph shall be done in such manner and on such
forms as the Secretary shall prescribe.’’
(b) CARRYOVER BASIS.—Section 1014(a) of the In-
ternal Revenue Code of 1986 (relating to basis of property
acquired from a decedent) is amended by striking the pe-
riod at the end of paragraph (3), inserting ‘‘, or’’ at the
end thereof, and inserting the following new paragraph:
‘‘(4) to the extent of the applicability of the ex-
clusion described in section 2031(c), the basis in the
hands of the decedent.’’
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(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to gross estates including land on
which qualified conservation easements were granted after
December 31, 1992, in taxable years ending after such
date.
SEC. 3. GIFT TAX ON LAND SUBJECT TO A QUALIFIED CON-
SERVATION EASEMENT.
(a) GIFT TAX WITH RESPECT TO LAND SUBJECT TO
A QUALIFIED CONSERVATION EASEMENT.—Section 2503
of the Internal Revenue Code of 1986 (relating to taxable
gifts) is amended by adding a new subsection (h) to read
as follows:
‘‘(h) GIFT TAX WITH RESPECT TO LAND SUBJECT
TO A QUALIFIED CONSERVATION EASEMENT.—The trans-
fer by gift of land subject to a qualified conservation ease-
ment shall not be treated as a transfer of property by gift
for purposes of this chapter. For purposes of this sub-
section, the term ‘land subject to a qualified conservation
easement’ shall have the same meaning as in section
2031(c), except that references therein to ‘decedent’ shall
refer to the donor and references to ‘the date of the dece-
dent’s death’ shall refer to the date of the transfer by the
donor.’’
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to gifts of land on which qualified
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valuation method) is amended by adding at the end there-
of the following paragraph:
‘‘(8) QUALIFIED CONSERVATION CONTRIBUTION
IS
NOT
A
DISPOSITION.—A qualified conservation
contribution (as defined in section 170(h)) by gift or
otherwise shall not be deemed a disposition under
subparagraph (c)(1)(A) of this section. If qualified
real property is land subject to a qualified conserva-
tion easement (as defined in section 2031(c)), sub-
sections (c)(1)–(7) of this section shall not apply.’’
(b) LAND SUBJECT TO A QUALIFIED CONSERVATION
EASEMENT IS NOT DISQUALIFIED.—Subsection (b)(1) of
section 2032A of the Internal Revenue Code of 1986 (re-
lating to alternative valuation method) is amended by add-
ing at the end thereof the following paragraph:
‘‘(E) If property is otherwise qualified real
property, the fact that it is land subject to a
qualified conservation easement shall not dis-
qualify it under this section.’’
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