To amend the Internal Revenue Code of 1986 to encourage contributions by individuals of capital gain real property for conservation purposes, to encourage qualified conservation contributions, and to modify the rules governing the estate tax exclusion for land subject to a qualified conservation easement.

SECTION 1. MODIFICATIONS TO ENCOURAGE CONTRIBUTIONS OF CAPITAL GAIN 
              REAL PROPERTY MADE FOR CONSERVATION PURPOSES AND 
              QUALIFIED CONSERVATION CONTRIBUTIONS.

    (a) Contributions of Capital Gain Real Property Made for 
Conservation Purposes and of Qualified Conservation Contributions Not 
Subject to Special Limitation on Contributions of Capital Gain 
Property.--Subparagraph (C) of section 170(b)(1) of the Internal 
Revenue Code of 1986 (relating to special limitation with respect to 
contributions described in subparagraph (A) of capital gain property) 
is amended by redesignating clause (iv) as clause (v) and by inserting 
after clause (iii) the following new clause:
                            ``(iv) In the case of charitable 
                        contributions described in subparagraph (A) of 
                        capital gain property, clauses (i) and (ii) 
                        shall not apply to--
                                    ``(I) any qualified conservation 
                                contribution (as defined in section 
                                170(h)), or
                                    ``(II) any other contribution of 
                                capital gain property which is real 
                                property if the contribution is of the 
                                donor's entire interest in such 
                                property and is to a qualified 
                                organization (as defined in section 
                                170(h)(3)) which is organized for 
                                conservation purposes (as defined in 
                                section 170(h)(4)(A)) and which 
                                provides the taxpayer, at the time of 
                                such donation, a letter of intent which 
                                contains an acknowledgment of the 
                                donee's intent that the property is 
                                being acquired for any such 
                                conservation purpose.''.
    (b) Unlimited Carryover for Contributions of Capital Gain Real 
Property for Conservation Purposes and of Qualified Conservation 
Contributions of Capital Gain Property.--Paragraph (1) of section 
170(d) of such Code in amended by adding at the end the following new 
subparagraph:
                    ``(C) Unlimited carryover for contributions of 
                capital gain real property for conservation purposes 
                and of qualified conservation contributions of capital 
                gain property.--The 5 taxable year limitation in 
                subparagraph (A) shall not apply to any charitable 
                contribution to which clauses (i) and (ii) of 
                subsection (b)(1)(C) do not apply by reason of clause 
                (iv) thereof. For purposes of this paragraph, the 
                excess described in the material preceding clause (i) 
                of subparagraph (A) shall be treated as attributable to 
                contributions described in the preceding sentence of 
                this subparagraph to the extent of such 
                contributions.''.
    (c) Effective Date.--The amendment made by this section shall apply 
to contributions made in taxable years beginning after the date of the 
enactment of this Act.

SEC. 2. MODIFICATION OF RULES RELATING TO ESTATE TAX EXCLUSION FOR LAND 
              SUBJECT TO QUALIFIED CONSERVATION EASEMENT.

    (a) Repeal of Certain Restrictions on Where Land Is Located.--
Clause (i) of section 2031(c)(8)(A) of the Internal Revenue Code of 
1986 is amended to read as follows:
                            ``(i) which is located in the United States 
                        or any possession of the United States,''.
    (b) Repeal of Limitation on Exclusion.--
            (1) In general.--Paragraph (1) of section 2031(c) of such 
        Code is amended by striking ``the lesser of--'' and all that 
        follows and inserting ``the applicable percentage of the value 
        of land subject to a qualified conservation easement, reduced 
        by the amount of any deduction under section 2055(f) with 
        respect to such land.''
            (2) Conforming amendments.--
                    (A) Subsection (c) of section 2031 of such Code is 
                amended by striking paragraph (3) and by redesignating 
                paragraphs (4) through (10) as paragraphs (3) through 
                (9), respectively.
                    (B) Paragraphs (2) and (6) of section 2031(c) of 
                such Code, as redesignated by subparagraph (A), are 
                each amended by striking ``paragraph (5)'' and 
                inserting ``paragraph (4)''.
                    (C) Paragraphs (1), (6), and (7)(A)(iii) of section 
                2031(c) of such Code, as redesignated by subparagraph 
                (A), are each amended by striking ``paragraph (6)'' and 
                inserting ``paragraph (5)''.
    (c) Date for Determining Value of Land and Easement.--Paragraph (2) 
of section 2032(c) of such Code (defining applicable percentage) is 
amended by adding at the end the following new sentence: ``The values 
taken into account under the preceding sentence shall be such values as 
of the date of the contribution referred to in paragraph (7)(B).''
    (d) Certain Commercial Recreational Uses Permitted.--Subparagraph 
(B) of section 2031(c)(7) of such Code, as redesignated by subsection 
(b), is amended to read as follows:
                    ``(B) Qualified conservation easement.--
                            ``(i) In general.--The term `qualified 
                        conservation easement' means a qualified 
                        conservation contribution (as defined in 
                        section 170(h)(1)) of a qualified real property 
                        interest (as defined in section 170(h)(2)(C)), 
                        except that clause (iv) of section 170(h)(4)(A) 
                        shall not apply, and the restriction on the use 
                        of such interest described in section 
                        170(h)(2)(C) shall include a prohibition on 
                        more than a de minimis use for a commercial 
                        recreational activity.
                            ``(ii) Special rules.--For purposes of this 
                        paragraph--
                                    ``(I) Retained rights.--Rights 
                                retained in the conservation easement 
                                to lease the land for hunting and 
                                fishing, so long as such leases are not 
                                inconsistent with the conservation 
                                purpose of the easement, shall be 
                                deemed to be de minimis use.
                                    ``(II) Pre-effective date 
                                easements.--Easements otherwise 
                                qualifying under the provisions of this 
                                subsection that were donated on or 
                                before the date of the enactment of 
                                this subclause, shall be deemed to 
                                allow no more than de minimis use for a 
                                commercial recreational activity unless 
                                by their terms they expressly provide 
                                for commercial recreational activity in 
                                excess of that otherwise allowed by 
                                this subparagraph.
                                    ``(III) Authority to extinguish 
                                right of commercial recreation 
                                activity.--For purposes of this 
                                section, if the executor of an estate 
                                and every person in being who has an 
                                interest in the land execute an 
                                agreement to amend or extinguish any 
                                right under the easement of commercial 
                                recreation activity in the land so as 
                                to ensure that such land is used for no 
                                more than de minimis commercial 
                                recreational activity, such agreement 
                                shall be treated as in effect as of the 
                                date of the election described in 
                                paragraph (5).''
    (e) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying after the date of the enactment of 
this Act.

Summary: Amends the Internal Revenue Code to exclude contributions of any qualified conservation contribution or capital gain real property made for conservation purposes from the application of the special limitation on contributions of capital gain property and from the application of the five-year carryover limitation. Repeals specified property location restrictions on the estate tax exclusion for property subject to a qualified conservation easement.