SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Open Space Preservation 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 (relating to the definition of gross estate) is amended by 
redesignating subsection (c) as subsection (d) and by inserting after 
subsection (b) the following new subsection:
    ``(c) Estate Tax With Respect to Land Subject to a Qualified 
Conservation Easement.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, there shall be excluded from the gross estate the 
        value of land subject to a qualified conservation easement 
        (less the amount of any indebtedness secured by such land). 
        There shall be included in the gross estate the value of each 
        development right retained by the donor in the conveyance 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 ending 
        on the date of the decedent's death, and with respect 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 historic 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 disposition of land 
        subject to retained development 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 Internal Revenue Code 
of 1986 (relating to basis of property acquired from a decedent) is 
amended by striking the period 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 conservation easements were granted 
after December 31, 1992.

SEC. 3. GIFT TAX ON LAND SUBJECT TO A QUALIFIED CONSERVATION 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 following new subsection:
    ``(h) Gift Tax With Respect to Land Subject to a Qualified 
Conservation Easement.--The transfer by gift of land subject to a 
qualified conservation easement (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 interest' 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 conservation easements were granted 
after December 31, 1992.

SEC. 4. TEMPORARY DEFERRAL OF SCHEDULED REDUCTION 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 determination of whether 
                farmland is eligible farmland shall be made on the date 
                the qualified 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 `qualified 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 farmland.
    ``(d) Verification of Covenant.--Subsection (a) shall not apply by 
reason of any covenant unless such person--
            ``(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 covenant 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.
Output: Open Space Preservation Act of 1993 - Amends the Internal Revenue Code to exclude from the gross estate the value of land subject to a qualified conservation easement for estate tax purposes.  Includes in the gross estate the value of each development right retained by the donor in the conveyance of such easement. 
Excludes from the gift tax the transfer by gift of land subject to a qualified conservation easement. 
Defers the reduction in estate tax rates from 1993 until 1998. 
Excludes from gross income any gain from the sale or exchange of eligible farmland that is subject to an irrevocable covenant binding all future owners to use the land as farmland.