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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.
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.