(1) IN GENERAL.—Part IV of subchapter A of 
chapter 11 of the Internal Revenue Code of 1986 
(relating to gross estate) is amended by inserting 
after section 2058 the following new section: 
‘‘SEC. 2059. FARM AND CONSERVATION LAND. 
‘‘(a) IN GENERAL.—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 adjusted value of the qualified 
farm or conservation land included in the estate. 
‘‘(b) ESTATES TO WHICH SECTION APPLIES.—This 
section shall apply to an estate if— 
‘‘(1) the decedent was (at the date of the dece-
dent’s death) a citizen or resident of the United 
States, and 
‘‘(2) the executor elects the application of this 
section and files the agreement referred to in sub-
section (d)(2) with respect to the qualified farm or 
conservation land. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFIED
FARM
OR
CONSERVATION 
LAND.—The term ‘qualified farm or conservation 
land’ means any real property— 
‘‘(A) which is located in the United States, 
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‘‘(B) which, on the date of the decedent’s 
death, was being used— 
‘‘(i) as a farm for farming purposes 
(within the meaning of section 2032A(e)), 
or 
‘‘(ii) exclusively for conservation pur-
poses (within the meaning of section 
170(h)), 
‘‘(C) with respect to which there is a re-
corded covenant which prevents any use of such 
land which is inconsistent with the uses de-
scribed in subparagraph (B), and 
‘‘(D) which is designated in the agreement 
referred to in subsection (d)(2). 
‘‘(2) ADJUSTED
VALUE.—The term ‘adjusted 
value’ means the value of the qualified farm or con-
servation land for purposes of this chapter, reduced 
by the amount allowable as a deduction under para-
graph (4) of section 2053(a). 
‘‘(d) ELECTION; 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 regulations pre-
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scribe. Such an election, once made, shall be irrev-
ocable. 
‘‘(2) AGREEMENT.—The agreement referred to 
in this paragraph is a written agreement signed by 
each person in being who has an interest (whether 
or not in possession) in any property designated in 
such agreement consenting to the application of sub-
section (e) with respect to such property. 
‘‘(3) MODIFICATION OF ELECTION AND AGREE-
MENT
PERMITTED.—The 
procedures 
prescribed 
under section 2032A(d)(3) shall apply for purposes 
of this subsection. 
‘‘(e) TAX TREATMENT OF DISPOSITIONS AND INCON-
SISTENT USES.—In the case of a decedent’s estate which 
includes qualified farm or conservation land with respect 
to which there is a covenant described in subsection 
(c)(1)(C) (including such a covenant made by a prior dece-
dent)— 
‘‘(1) IMPOSITION
OF
ADDITIONAL
ESTATE 
TAX.—If, at any time after the decedent’s death and 
before the death of the heir— 
‘‘(A) the heir disposes of any interest in 
qualified farm or conservation land and the per-
son acquiring such interest is not subject to the 
covenant described in subsection (c)(1)(C), or 
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‘‘(B) the heir uses such land in any man-
ner which violates the terms of such covenant, 
then, there is hereby imposed an additional estate 
tax. 
‘‘(2) AMOUNT OF ADDITIONAL TAX.— 
‘‘(A) IN
GENERAL.—The amount of the 
additional tax imposed by paragraph (1) with 
respect to any interest shall be the amount 
equal to the sum of— 
‘‘(i) the adjusted tax difference with 
respect to the estate, and 
‘‘(ii) interest at the underpayment 
rate established under section 6621 on the 
amount determined under clause (i) for the 
period beginning on the due date for filing 
the estate tax return. 
‘‘(B) ADJUSTED
TAX
DIFFERENCE
WITH 
RESPECT
TO
ESTATE.—For purposes of this 
subsection, the term ‘adjusted tax difference 
with respect to the estate’ means the excess 
of— 
‘‘(i) what would have been the estate 
tax liability if the fair market value of the 
interest at the time of the disposition or 
use described in paragraph (1), over 
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‘‘(ii) the estate tax liability. 
For purposes of this subparagraph, the term 
‘estate tax liability’ means the tax imposed by 
section 2001 reduced by the credits allowable 
against such tax. 
‘‘(3) CERTAIN ADDITIONAL RULES TO APPLY.— 
Rules similar to the rules of paragraphs (2)(D), 
(2)(E), (3), (4), (5), and (8) of section 2032A(c) 
shall apply for purposes of this subsection. 
‘‘(4) INCOME
TAX
TREATMENT
OF
DISPOSI-
TIONS.—For purposes of chapter 1, in any case in 
which an additional tax is imposed by this sub-
section by reason of any disposition or use of an in-
terest, such interest (if not otherwise disposed of in 
a transaction in which gain is recognized) shall be 
treated as sold at its fair market value at the time 
of the disposition or use, and gain shall be recog-
nized notwithstanding any provision of subtitle A. 
‘‘(f) BASIS.—For purposes of this title, the basis of 
any qualified farm or conservation land which is included 
in the estate of a decedent pursuant to subsection (a) shall 
be the adjusted basis of such qualified farm or conserva-
tion land on the date of the decedent’s death. 
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‘‘(g) CERTAIN ADDITIONAL RULES TO APPLY.—For 
purposes of this section, rules similar to the following rules 
shall apply: 
‘‘(1) CERTAIN
REAL
PROPERTY
INCLUDED.— 
Section 2032A(e)(3)(A). 
‘‘(2) DEFINITIONS
OF
FARM
AND
FARMING 
PURPOSES.—Paragraphs (4) and (5) of section 
2032A(e). 
‘‘(3) PROPERTY ACQUIRED FROM DECEDENT.— 
Section 2032A(e)(9). 
‘‘(4) 
COMMUNITY
PROPERTY.—Section 
2032A(e)(10). 
‘‘(5) BOND IN LIEU OF PERSONAL LIABILITY.— 
Section 2032A(e)(11). 
‘‘(6) SPECIAL RULE FOR WOODLANDS.—Section 
2032A(e)(12). 
‘‘(7) 
STATUTE
OF
LIMITATION.—Section 
2032A(f). 
‘‘(8) SPECIAL RULES FOR INVOLUNTARY CON-
VERSIONS OF REAL PROPERTY.—Section 2032A(h). 
‘‘(9) EXCHANGES OF QUALIFIED REAL PROP-
ERTY.—Section 2032A(i). 
‘‘(h) CROSS REFERENCE.—See section 6324C for 
special lien on farm and conservation land.’’. 
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(2) SPECIAL LIEN FOR FARM AND CONSERVA-
TION LAND.—Part II of subchapter C of chapter 64 
of such Code (relating to liens) is amended by in-
serting after section 6324B the following new sec-
tion: 
‘‘SEC. 6324C. SPECIAL LIEN ON FARM AND CONSERVATION 
LAND. 
‘‘(a) GENERAL RULE.—In the case of qualified farm 
or conservation land (within the meaning of section 
2059(c)(1)) with respect to which an election is in effect 
under section 2059(b)(2) or section 2524(a) or pursuant 
to section 2611(b)(2), an amount equal to the adjusted 
value attributable to such land (within the meaning of sec-
tion 2059(c)(2)) shall be a lien in favor of the United 
States on such land. 
‘‘(b) PERIOD OF LIEN.—The lien imposed by this sec-
tion shall arise at the time an election is filed under sec-
tion 2059 and shall continue with respect to such qualified 
farm or conservation land until the earlier of— 
‘‘(1) such land is transferred to a qualified or-
ganization (as defined in section 170(h)(3)), 
‘‘(2) the liability for tax under subsection (e) of 
section 2059 with respect to such land has been sat-
isfied or has become unenforceable by reason of 
lapse of time, or 
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‘‘(3) it is established to the satisfaction of the 
Secretary that no further tax liability may arise 
under section 2059(e) with respect to such land. 
‘‘(c) CERTAIN RULES AND DEFINITIONS MADE AP-
PLICABLE.— 
‘‘(1) IN GENERAL.—The rule set forth in para-
graphs (1), (3), and (4) of section 6324A(d) shall 
apply with respect to the lien imposed by this section 
as if it were a lien imposed by section 6324A. 
‘‘(2) QUALIFIED
FARM
OR
CONSERVATION 
LAND.—For purposes of this section, the term 
‘qualified farm or conservation land’ includes quali-
fied replacement property (within the meaning of 
section 2032A(h)(3)(B)) and qualified exchange 
property 
(within 
the 
meaning 
of 
section 
2032A(i)(3)). 
‘‘(d) SUBSTITUTION OF SECURITY FOR LIEN.—To 
the extent provided in regulations prescribed by the Sec-
retary, the furnishing of security may be substituted for 
the lien imposed by this section.’’. 
(b) CONFORMING AND CLERICAL AMENDMENTS.— 
(1) Section 1016(a) of such Code is amended 
by striking ‘‘and’’ at the end of paragraph (35), by 
striking the period at the end of paragraph (36) and 
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inserting ‘‘, and’’, and by inserting after paragraph 
(36) the following new paragraph: 
‘‘(37) to the extent provided in section 
2059(f).’’. 
(2) The table of sections for part III of sub-
chapter A of chapter 11 of such Code is amended by 
inserting after the item relating to section 2033 the 
following new item: 
‘‘Sec. 2059. Farm and conservation land.’’. 
(3) The table of sections for part II of sub-
chapter C of chapter 64 of such Code is amended by 
inserting after the item relating to section 6324B 
the following new item: 
‘‘Sec. 6324C. Special lien on farm and conservation land.’’. 
(c) GIFT TAX.— 
(1) IN GENERAL.—Subchapter C of chapter 12 
of subtitle B of such Code (deductions) is amended 
by redesignating section 2524 as section 2525 and 
inserting after section 2523 the following new sec-
tion: 
‘‘SEC. 2524. GIFT OF FARM AND CONSERVATION LAND. 
‘‘(a) IN GENERAL.—In computing taxable gifts for 
the calendar year, there shall be allowed as a deduction 
in the case of a citizen or resident the adjusted value of 
all gifts made during such year which are qualified farm 
or conservation land if the donee elects the application of 
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this section and files the agreement referred to in sub-
section (c)(2) with respect to the qualified farm or con-
servation land. 
‘‘(b) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFIED
FARM
OR
CONSERVATION 
LAND.—The term ‘qualified farm or conservation 
land’ means any real property— 
‘‘(A) which is located in the United States, 
‘‘(B) which, on the date of the gift, was 
being used— 
‘‘(i) as a farm for farming purposes 
(within the meaning of section 2032A(e)), 
or 
‘‘(ii) exclusively for conservation pur-
poses (within the meaning of section 
170(h)), 
‘‘(C) with respect to which there is a re-
corded covenant which prevents any use of such 
land which is inconsistent with the uses de-
scribed in subparagraph (B), and 
‘‘(D) which is designated in the agreement 
referred to in subsection (c)(2). 
‘‘(2) ADJUSTED
VALUE.—The term ‘adjusted 
value’ means the value of the qualified farm or con-
servation land for purposes of this chapter, reduced 
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by the amount allowable as a deduction under para-
graph (4) of section 2053(a). 
‘‘(c) ELECTION; AGREEMENT.— 
‘‘(1) ELECTION.—The election under this sec-
tion shall be made in such manner as the Secretary 
shall by regulations prescribe. Such an election, once 
made, shall be irrevocable. 
‘‘(2) AGREEMENT.—The agreement referred to 
in this paragraph is a written agreement signed by 
each person in being who has an interest (whether 
or not in possession) in any property designated in 
such agreement consenting to the application of sub-
section (d) with respect to such property. 
‘‘(3) MODIFICATION OF ELECTION AND AGREE-
MENT
PERMITTED.—The 
procedures 
prescribed 
under section 2032A(d)(3) shall apply for purposes 
of this subsection. 
‘‘(d) TAX TREATMENT OF DISPOSITIONS AND INCON-
SISTENT USES.—In the case of a decedent’s estate which 
includes qualified farm or conservation land with respect 
to which there is a covenant described in subsection 
(c)(1)(C) (including such a covenant made by a prior dece-
dent)— 
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‘‘(1) IMPOSITION OF ADDITIONAL GIFT TAX.— 
If, at any time after the gift described in subsection 
(a) and before the death of the donee— 
‘‘(A) the donee disposes of any interest in 
qualified farm or conservation land and the per-
son acquiring such interest is not subject to the 
covenant described in subsection (b)(1)(C), or 
‘‘(B) the donee uses such land in any man-
ner which violates the terms of such covenant, 
then, there is hereby imposed an additional gift tax. 
‘‘(2) AMOUNT OF ADDITIONAL TAX.— 
‘‘(A) IN
GENERAL.—The amount of the 
additional tax imposed by paragraph (1) with 
respect to any interest shall be the amount 
equal to the sum of— 
‘‘(i) the adjusted tax difference with 
respect to the gift, and 
‘‘(ii) interest at the underpayment 
rate established under section 6621 on the 
amount determined under clause (i) for the 
period beginning on the date of such gift. 
‘‘(B) ADJUSTED
TAX
DIFFERENCE
WITH 
RESPECT TO GIFT.—For purposes of this sub-
section, the term ‘adjusted tax difference with 
respect to the gift’ means the excess of— 
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