I
103D CONGRESS
1ST SESSION
H. R. 428
To amend the Internal Revenue Code of 1986 to exclude from the gross
estate the value of land subject to a qualified conservation easement
if certain conditions are satisfied and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 5, 1993
Mr. WALKER 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 the gross estate the value of land subject to a
qualified conservation easement if certain conditions are
satisfied and for other purposes.
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 ‘‘Open Space Preserva-
tion Act of 1993’’.
SEC. 2. TREATMENT OF LAND SUBJECT TO A QUALIFIED
CONSERVATION EASEMENT.
(a) GROSS ESTATE TAX WITH RESPECT TO LAND
SUBJECT TO A QUALIFIED CONSERVATION EASEMENT.—
Section 2031 of the Internal Revenue Code of 1986 (relat-
ing to the definition of gross estate) is amended by redes-
ignating subsection (c) as subsection (d) and by inserting
after subsection (b) the following new subsection:
‘‘(c) ESTATE TAX WITH RESPECT TO LAND SUB-
JECT TO A QUALIFIED CONSERVATION EASEMENT.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, there shall be excluded from
the gross estate the value of land subject to a quali-
fied conservation easement (less the amount of any
indebtedness secured by such land). There shall be
included in the gross estate the value of each devel-
opment right retained by the donor in the convey-
ance of such qualified conservation easement. For
purposes of this subsection, the term ‘land subject to
a qualified conservation easement’ shall mean land,
which was owned by the decedent or a member of
the decedent’s family during the 3-year period end-
ing on the date of the decedent’s death, and with re-
spect to which a qualified conservation contribution
of a qualified real property interest (as defined in
section 170(h)) has been made by the decedent, the
decedent’s spouse or the decedent’s parent, a lineal
ancestor of the decedent, or a lineal descendant of
the decedent, the decedent’s spouse or the decedent’s
parent, or a spouse of such lineal descendant. For
purposes of this subsection, the term ‘qualified real
property interest’ shall not include a certified his-
toric 
structure 
(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 DISPOSI-
TION OF LAND SUBJECT TO RETAINED DEVELOP-
MENT RIGHT.—The tax attributable to the amount
included in the gross estate relating to development
rights retained by the donor in the conveyance of a
qualified conservation easement shall be due upon
the disposition (other than by gift or bequest) of
such property.’’
(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) in the case of the applicability of section
2031(c), the basis in the hands of the decedent.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to land on which qualified con-
servation easements were granted after December 31,
1992.
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 at the end thereof the follow-
ing new subsection:
‘‘(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 (other than development rights retained by the donor
of such easement) shall not be treated as a transfer of
property by gift for purposes of this chapter. For purposes
of this subsection, the term ‘land subject to a qualified
conservation easement’ and ‘qualified real property inter-
est’ shall have the same meaning as in section 2031(c)
and the term ‘member of the decedent’s family’ shall have
the same meaning as the term ‘member of the family’ in
section 2032A.’’
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to land on which qualified con-
servation easements were granted after December 31,
1992.
SEC. 4. TEMPORARY DEFERRAL OF SCHEDULED REDUC-
TION IN CERTAIN ESTATE TAX RATES.
(a) IN GENERAL.—Paragraph (2) of section 2001(c)
of the Internal Revenue Code of 1986 (relating to phase-
in of 50 percent maximum rate) is amended by adding
at the end thereof the following new subparagraph:
‘‘(E) AFTER 1992 AND BEFORE 1998.—In
the case of decedents dying, and gifts made
after 1992 and before 1998, the substitution
under this paragraph shall be as follows:
‘‘If the amount with respect
to which the tentative tax
to be computed is:
The tentative tax is:
Over $2,500,000 ............................
$1,025,800, plus 53 percent of the
excess over $2,500,000.’’
(b) TECHNICAL AMENDMENT.—Subparagraph (A) of
section 2001(c)(2) of such Code is amended by striking
‘‘1993’’ and inserting ‘‘1998’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply in the case of decedents dying, and
gifts made, after December 31, 1992.
SEC. 5. EXCLUSION OF GAIN FROM SALE OF CERTAIN
FARMLAND.
(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 redesignating section 137 as section 138 and
by inserting after section 136 the following new section:
‘‘SEC. 137. SALES AND EXCHANGES OF FARMLAND THE USE
OF WHICH IS RESTRICTED TO FARMING.
‘‘(a) GENERAL RULE.—In the case of an operator of
farmland, gross income does not include gain from the sale
or exchange of eligible farmland if there is in effect on
the date of such sale or exchange a qualified covenant
which does not permit any use of such farmland for any
purpose other than use as farmland.
‘‘(b) DEFINITIONS.—For purposes of this section—
‘‘(1) ELIGIBLE FARMLAND.—
‘‘(A) IN
GENERAL.—The term ‘eligible
farmland’ means any farmland with respect to
which the land use restrictions imposed by the
State, and the land use restrictions imposed by
any political subdivision of such State, in which
such farmland is located provide that such
farmland may be used only as farmland.
‘‘(B) FARMLAND TO WHICH NO LAND USE
RESTRICTION APPLIES TREATED AS ELIGIBLE
FARMLAND.—In the case of any farmland with
respect to which no land use restriction imposed
by a State or political subdivision applies, such
farmland shall be treated as eligible farmland.
‘‘(C) DATE FOR DETERMINING WHETHER
FARMLAND IS ELIGIBLE FARMLAND.—The de-
termination of whether farmland is eligible
farmland shall be made on the date the quali-
fied covenant with respect to such farmland is
entered into.
‘‘(2) FARMLAND.—The term ‘farmland’ means
any real property—
‘‘(A) which is located in the United States,
and
‘‘(B) which is used as a farm for farming
purposes (within the meaning of section
2032A(e)).
‘‘(3) QUALIFIED COVENANT—The term ‘quali-
fied covenant’ means a covenant—
‘‘(A) which may not be revoked,
‘‘(B) which, with respect to farmland to
which such covenant applies, is entered into by
all persons having any ownership interest in
such farmland, and
‘‘(C) which binds all future owners of the
farmland to which such covenant applies.
‘‘(c) APPLICATION WITH PRINCIPAL RESIDENCES.—
For purposes of this section, use as farmland includes use
as the principal residence of the operator of such farm-
land.
‘‘(d) VERIFICATION OF COVENANT.—Subsection (a)
shall not apply by reason of any covenant unless such per-
son—
‘‘(1) notifies (in such form and manner as the
Secretary may by regulations prescribe) both the
Secretary and the Secretary of Agriculture of the
political subdivision of the State in which such cov-
enant is recorded, and
‘‘(2) submits to the Secretary a copy of such
covenant.’’
(b) CLERICAL AMENDMENT.—The table of sections
for such part is amended by striking out the item relating
to section 137 and inserting in lieu thereof the following:
‘‘Sec. 137. Sales and exchanges of farmland the use of which is
restricted to farming.
‘‘Sec. 138. Cross references to other Acts.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to covenants first recorded after
the date of the enactment of this Act, in taxable years
ending after such date.
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