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104TH CONGRESS
1ST SESSION
H. R. 2218
To amend the Internal Revenue Code of 1986 to provide an election to
exclude from the gross estate of a decedent the value of certain land
subject to a qualified conservation easement, and to make technical
changes to alternative valuation rules.
IN THE HOUSE OF REPRESENTATIVES
AUGUST 4, 1996
Mr. GILCHREST 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 of a decedent
the value of certain land subject to a qualified conserva-
tion easement, 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,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Farmland Preservation
Act of 1995’’.
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 described in paragraph (3), then, except as
otherwise provided in this subsection, there shall be
excluded from the gross estate the value of land sub-
ject to a qualified conservation easement (reduced by
the amount of any indebtedness to which such land
is subject).
‘‘(2) TREATMENT OF RETAINED DEVELOPMENT
RIGHT.—
‘‘(A) IN
GENERAL.—Paragraph (1) shall
not apply to the value of any development right
retained by the donor in the conveyance of a
qualified conservation easement. The tax im-
posed by section 2001 (if any) attributable to
any development right so retained shall be im-
posed only upon the disposition of such prop-
erty. The tax so imposed shall be due and pay-
able by the person so disposing of such property
on the 15th day of the 4th month following the
calendar year in which such disposition occurs.
‘‘(B) DEFINITIONS.—For purposes of this
paragraph—
‘‘(i) DISPOSITION.—The term ‘disposi-
tion’ shall not include any gift or devise.
‘‘(ii) 
DEVELOPMENT
RIGHT.—The
term ‘development right’ means the right
to establish or use any structure and the
land immediately surrounding it for sale,
rent, or any other commercial purpose
which is not subordinate to and directly
supportive of—
‘‘(I) the conservation purpose
identified in the easement, or
‘‘(II) the activity of farming, for-
estry, ranching, horticulture, viticul-
ture, or recreation (whether or not for
profit) conducted on land subject to
the easement in which such right is
retained.
‘‘(3) ELECTION.—The election under this sub-
section shall be made on the return of the tax im-
posed by section 2001. Such an election, once made,
shall be irrevocable.
‘‘(4) CALCULATION AND NOTICE OF POTENTIAL
ESTATE TAX DUE.—An executor making the election
described in paragraph (3) shall compute the
amount of tax imposed by section 2001 upon any de-
velopment right (as defined in paragraph (2)) re-
tained by the donor in the conveyance of such quali-
fied conservation easement and include such com-
putation with the return of the tax imposed by sec-
tion 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 subject to such qualified conserva-
tion easement is located. The report of the computa-
tion of tax on any retained development 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.
‘‘(5) DEFINITIONS.—For purposes of this sub-
section—
‘‘(A) LAND
SUBJECT
TO
A
QUALIFIED
CONSERVATION
EASEMENT.—The term ‘land
subject to a qualified conservation easement’
means land—
‘‘(i) which is located in or within 50
miles of an area which, on the date of the
decedent’s death, is—
‘‘(I) a metropolitan area (as de-
fined by the Office of Management
and Budget), or
‘‘(II) a National Park or Na-
tional Seashore (unless it is deter-
mined by the Secretary that land in or
within 50 miles of such Park or Sea-
shore is not under significant develop-
ment pressure),
‘‘(ii) which was owned by the decedent
or a member of the decedent’s family at all
times during the 3-year period ending on
the date of the decedent’s death, and
‘‘(iii) with respect to which a qualified
conservation easement is or has been made
by the decedent or a member of the dece-
dent’s family.
‘‘(B) QUALIFIED
CONSERVATION
EASE-
MENT.—The term ‘qualified conservation ease-
ment’ means a qualified conservation contribu-
tion (as defined in section 170(h)(1)) of a quali-
fied real property interest (as defined in section
170(h)(2)(C)). 
Clause 
(iv) 
of 
section
170(h)(4)(A) shall not apply for purposes of the
preceding sentence.
‘‘(C) MEMBER
OF
FAMILY.—The term
‘member of the decedent’s family’ means any
member of the family (as defined in section
2032A(e)(2)) of the decedent.’’
(b) CARRYOVER BASIS.—Section 1014(a) of such
Code (relating to basis of property acquired from a dece-
dent) is amended by striking the period at the end of para-
graph (3) and inserting ‘‘, or’’ and by adding after para-
graph (3) 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.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to estates of decedents dying after
December 31, 1994.
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 the following 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 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’ has the meaning given to such term by section
2031(c); except that references to the decedent shall be
treated as references to the donor and references to the
date of the decedent’s death shall be treated as references
to the date of the transfer by the donor.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to gifts made after December 31,
1994.
SEC. 4. QUALIFIED CONSERVATION CONTRIBUTION IS NOT
A DISPOSITION.
(a) QUALIFIED CONSERVATION CONTRIBUTION IS
NOT A DISPOSITION.—Subsection (c) of section 2032A of
the Internal Revenue Code of 1986 (relating to alternative
valuation method) is amended by adding at the end the
following new paragraphs:
‘‘(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
subsection (c)(1)(A).
‘‘(9) EXCEPTION FOR REAL PROPERTY IS LAND
SUBJECT
TO
A
QUALIFIED
CONSERVATION
EASE-
MENT.—If qualified real property is land subject to
a qualified conservation easement (as defined in sec-
tion 2031(c)), the preceding paragraphs of this sub-
section shall not apply.’’
(b) LAND SUBJECT TO A QUALIFIED CONSERVATION
EASEMENT IS NOT DISQUALIFIED.—Subsection (b) of
section 2032A of such Code (relating to alternative valu-
ation method) is amended by adding at the end the follow-
ing paragraph:
‘‘(E) If property is otherwise qualified real
property, the fact that it is land subject to a
qualified conservation easement (as defined in
section 2031(c)) shall not disqualify it under
this section.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to contributions made,
and easements granted, after December 31, 1994.
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