‘‘(I) which allocated its entire
State conservation credit ceiling for
the preceding calendar year, and
‘‘(II) for which a request is made
(not later than May 1 of the calendar
year) to receive an allocation under
clause (iii).
‘‘(F) SPECIAL
RULE
FOR
STATES
WITH
CONSTITUTIONAL
HOME
RULE
CITIES.—For
purposes of this subsection—
‘‘(i) IN
GENERAL.—The aggregate
conservation credit dollar amount for any
constitutional home rule city for any cal-
endar year shall be an amount which bears
the same ratio to the State conservation
credit ceiling for such calendar year as—
‘‘(I) the land used for agricul-
tural purposes within a 25-mile radius
of such city, bears to
‘‘(II) the land used for agricul-
tural purposes in the entire State.
‘‘(ii) COORDINATION WITH OTHER AL-
LOCATIONS.—In the case of any State
which contains 1 or more constitutional
home rule cities, for purposes of applying
this paragraph with respect to conserva-
tion credit agencies in such State other
than constitutional home rule cities, the
State conservation credit ceiling for any
calendar year shall be reduced by the ag-
gregate conservation credit dollar amounts
determined for such year for all constitu-
tional home rule cities in such State.
‘‘(iii) CONSTITUTIONAL
HOME
RULE
CITY.—For purposes of this subparagraph,
the term ‘constitutional home rule city’ has
the meaning given such term by section
146(d)(3)(C).
‘‘(G) STATE
MAY
PROVIDE
FOR
DIF-
FERENT
ALLOCATION.—Rules similar to the
rules of section 146(e) (other than paragraph
(2)(B) thereof) shall apply for purposes of this
paragraph.
‘‘(H) LAND
USED
FOR
AGRICULTURAL
PURPOSES.—For purposes of this paragraph,
the term ‘land used for agricultural purposes’
means the number of acres classified as land in
farms in the 1997 Census of Agriculture con-
ducted by the United States Department of Ag-
riculture.
‘‘(I) SECRETARY.—For purposes of this
paragraph, the term ‘Secretary’ means the Sec-
retary of Agriculture and the Secretary of the
Interior, acting pursuant to jointly established
rules and procedures.
‘‘(3) SPECIAL RULES.—
‘‘(A) INTERESTS MUST BE LOCATED WITH-
IN JURISDICTION OF CREDIT AGENCY.—A con-
servation credit agency may allocate its aggre-
gate conservation credit dollar amount only
with respect to acquisitions of qualified real
property interests located in the jurisdiction of
the governmental unit of which such agency is
a part.
‘‘(B) AGENCY ALLOCATIONS IN EXCESS OF
LIMIT.—If the aggregate conservation credit
dollar amounts allocated by a conservation cred-
it agency for any calendar year exceed the por-
tion of the State conservation credit ceiling allo-
cated to such agency for such calendar year, the
conservation credit dollar amounts so allocated
shall be reduced (to the extent of such excess)
for acquisitions of qualified real property inter-
ests in the reverse order in which the alloca-
tions of such amounts were made.
‘‘(4) CONSERVATION
CREDIT
AGENCY.—For
purposes of this subsection, the term ‘conservation
credit agency’ means any agency authorized to carry
out this subsection.
‘‘(i) REGULATIONS.—Except as provided in sub-
section (h)(2)(I), the Secretary shall prescribe such regu-
lations as may be necessary to carry out the purposes of
this section.
‘‘(j) TERMINATION.—Subparagraph (A) of subsection
(h)(1) shall not apply to any amount allocated after De-
cember 31, 2005.’’.
(b) RECOGNITION OF GAIN.—Section 1001 (relating
to determination of amount of and recognition of gain or
loss) is amended by adding at the end the following new
subsection:
‘‘(f) QUALIFIED REAL PROPERTY INTERESTS.—Gain
shall be recognized on the sale of a qualified real property
interest (as defined in section 30B(d)) to a qualified con-
servation organization (as defined in section 30B(c)) ex-
clusively for conservation purposes (as defined in section
30B(e)) only to the extent that the amount realized on
the sale exceeds the taxpayer’s adjusted basis in the entire
property to which the qualified real property interest re-
lates.’’.
(c) BASIS ADJUSTMENT.—Section 1016 (relating to
adjustments to basis) is amended by redesignating sub-
section (e) as subsection (f) and by inserting after sub-
section (d) the following new subsection:
‘‘(e) ADJUSTMENTS TO BASIS OF CERTAIN REAL
PROPERTY.—If the taxpayer has sold a qualified real
property interest in a transaction to which section 1001(f)
applies, then the taxpayer’s basis in the remaining prop-
erty shall be reduced (but not below zero) by the amount
realized on the sale.’’.
(d) CONFORMING AMENDMENTS.—
(1) PASSIVE LOSS RULES INAPPLICABLE.—Sec-
tion 469(d)(2)(A)(i) is amended to read as follows:
‘‘(i) subpart D (other than section
30B) of part IV of subchapter A, or’’.
(2) UNRELATED BUSINESS INCOME TAX.—Sec-
tion 511(a)(1) is amended by striking ‘‘section 11.’’
and inserting ‘‘section 11, less any credits to which
the organization is entitled under section 30B.’’.
(3) DENIAL
OF
CHARITABLE
CONTRIBUTION
DEDUCTION.—Section 170(e) is amended by adding
at the end the following new paragraph:
‘‘(7) SPECIAL RULE FOR CONTRIBUTIONS OF
INTERESTS IN QUALIFIED CONSERVATION ORGANIZA-
TIONS.—No deduction shall be allowed for the con-