HR 390 IHCommentsClose CommentsPermalink

112th CONGRESSCommentsClose CommentsPermalink

1st SessionCommentsClose CommentsPermalink

H. R. 390CommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to provide an exclusion from the gross estate for certain farmlands and lands subject to qualified conservation easements, and for other purposes.CommentsClose CommentsPermalink

IN THE HOUSE OF REPRESENTATIVESCommentsClose CommentsPermalink

January 20, 2011CommentsClose CommentsPermalink

Mr. THOMPSON of California introduced the following bill; which was referred to the Committee on Ways and MeansCommentsClose CommentsPermalink

A BILLCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to provide an exclusion from the gross estate for certain farmlands and lands subject to qualified conservation easements, and for other purposes.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Family Farm Preservation and Conservation Estate Tax Act’.CommentsClose CommentsPermalink

SEC. 2. EXCLUSION FROM GROSS ESTATE FOR CERTAIN FARMLAND SO LONG AS FARMLAND USE CONTINUES.

(a) In General- Part III of subchapter A of chapter 11 of the Internal Revenue Code of 1986 (relating to gross estate) is amended by inserting after section 2033 the following new section:CommentsClose CommentsPermalink

‘SEC. 2033A. EXCLUSION OF CERTAIN FARMLAND SO LONG AS USE AS FARMLAND CONTINUES.

‘(a) In General- In the case of an estate of a decedent to which this section applies, if the executor makes the election described in subsection (f), the value of the gross estate shall not include the adjusted value of qualified farmland included in the estate.CommentsClose CommentsPermalink





‘(b) Estates to Which Section Applies- This section shall apply to an estate if--CommentsClose CommentsPermalink





‘(1) the decedent was (at the date of the decedent’s death) a citizen or resident of the United States, andCommentsClose CommentsPermalink





‘(2) during the 8-year period ending on the date of the decedent’s death there have been periods aggregating 5 years or more during which--CommentsClose CommentsPermalink





‘(A) the qualified farmland was owned by the decedent or a member of the decedent’s family, andCommentsClose CommentsPermalink





‘(B) there was material participation (within the meaning of section 2032A(e)(6)) by the decedent or a member of the decedent’s family in the operation of such farmland, except that ‘material participation’ shall also include any rental of real estate and related property between the estate of the decedent or any successor thereto and any tenant so long as the tenant uses the real estate and related property to produce agricultural or horticultural commodities, including livestock, bees, poultry, orchards and woodlands, timber and fur-bearing animals and wildlife, on such farmland.CommentsClose CommentsPermalink





Rules similar to the rules of paragraphs (4) and (5) of section 2032A(b) shall apply for purposes of subparagraph (B).CommentsClose CommentsPermalink





‘(c) Definitions and Special Rule- For purposes of this section--CommentsClose CommentsPermalink





‘(1) QUALIFIED FARMLAND- The term ‘qualified farmland’ means any real property--CommentsClose CommentsPermalink





‘(A) which is located in the United States,CommentsClose CommentsPermalink





‘(B) which is used as a farm for farming purposes, andCommentsClose CommentsPermalink





‘(C) which was acquired from or passed from the decedent to a qualified heir of the decedent and which, on the date of the decedent’s death, was being so used by the decedent or a member of the decedent’s family.CommentsClose CommentsPermalink





‘(2) MEMBER OF FAMILY- A member of a family, with respect to any individual, means--CommentsClose CommentsPermalink





‘(A) a member of the family (as defined by section 2031A(e)(2)), andCommentsClose CommentsPermalink





‘(B) includes--CommentsClose CommentsPermalink





‘(i) a lineal descendant of any spouse described in subparagraph (D) of section 2032A(e)(2),CommentsClose CommentsPermalink





‘(ii) a lineal descendant of a sibling of a parent of such individual,CommentsClose CommentsPermalink





‘(iii) a spouse of any lineal descendant described in clause (ii), andCommentsClose CommentsPermalink





‘(iv) a lineal descendant of a spouse described in clause (iii).CommentsClose CommentsPermalink





‘(3) ADJUSTED VALUE- The term ‘adjusted value’ means the value of farmland for purposes of this chapter (determined without regard to this section), reduced by the amount deductible under paragraph (3) or (4) of section 2053(a).CommentsClose CommentsPermalink





‘(4) OTHER TERMS- Any other term used in this section which is also used in section 2032A shall have the same meaning given such term by section 2032A.CommentsClose CommentsPermalink





‘(d) Tax Treatment of Dispositions and Failures to Use for Farming Purposes-CommentsClose CommentsPermalink





‘(1) IMPOSITION OF RECAPTURE TAX- If, at any time after the decedent’s death--CommentsClose CommentsPermalink





‘(A) the qualified heir disposes of any interest in qualified farmland (other than by a disposition to a member of his family), orCommentsClose CommentsPermalink





‘(B) the qualified heir ceases to use the real property which was acquired (or passed) from the decedent as a farm for farming purposes,CommentsClose CommentsPermalink





then there is hereby imposed a recapture tax on such disposition or cessation of use.CommentsClose CommentsPermalink





‘(2) AMOUNT OF RECAPTURE TAX- The amount of the tax imposed by paragraph (1) shall be the excess of--CommentsClose CommentsPermalink





‘(A) the tax which would have been imposed by section 2001 on the estate of the decedent but determined as if such estate included the interest in qualified farmland described in paragraph (1) which was so disposed of or ceased to be so used, reduced by the credits allowable against such tax, overCommentsClose CommentsPermalink





‘(B) the tax imposed by section 2001 on the estate of the decedent, reduced by such credits.CommentsClose CommentsPermalink





For purposes of this paragraph, the value of the interest in qualified farmland specified in subparagraph (A) shall be the adjusted value of such interest as of the date of the disposition or cessation of such interest described in paragraph (1).CommentsClose CommentsPermalink





‘(3) REGULATIONS- The Secretary may prescribe such regulations as may be necessary or appropriate to carry out this subsection, including regulations requiring record keeping and information reporting, except that the Secretary may not impose a lien on the estate of the decedent or qualified farmland for such purposes.CommentsClose CommentsPermalink





‘(e) Application of Other Rules- Rules similar to the rules of subsections (e) (other than paragraph (13) thereof), (f), (g), (h), and (i) of section 2032A shall apply for purposes of this section.CommentsClose CommentsPermalink





‘(f) Election- The election under this subsection shall be made on or before the due date (including extensions) for filing the return of tax imposed by section 2001 and shall be made on such return.’.CommentsClose CommentsPermalink





(b) Clerical Amendment- The table of sections for part III of subchapter A of chapter 11 of such Code is amended by inserting after the item relating to section 2033 the following new item:CommentsClose CommentsPermalink





‘Sec. 2033A. Exclusion of certain farmland so long as use as farmland continues.’.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to estates of decedents dying after the date of the enactment of this Act.CommentsClose CommentsPermalink

SEC. 3. TEMPORARY EXCLUSION OF QUALIFIED CONSERVATION EASEMENTS.

(a) In General- Part III of subchapter A of chapter 11 of the Internal Revenue Code of 1986 (relating to gross estate), as amended by section 2, is amended by inserting after section 2033A the following new section:CommentsClose CommentsPermalink

‘SEC. 2033B. TEMPORARY EXCLUSION OF QUALIFIED CONSERVATION EASEMENTS.

‘(a) In General- In the case of an estate of a decedent to which this section applies, if the executor makes the election described in subsection (d)--CommentsClose CommentsPermalink





‘(1) the value of the gross estate shall not include the value of land subject to a qualified conservation easement included in the estate, butCommentsClose CommentsPermalink





‘(2) a tax under subsection (b) shall apply.CommentsClose CommentsPermalink





‘(b) Tax Treatment of Dispositions and for Use Incompatible With Conservation Easement-CommentsClose CommentsPermalink





‘(1) IMPOSITION OF RECAPTURE TAX- If, at any time after the decedent’s death--CommentsClose CommentsPermalink





‘(A) the qualified heir disposes of any interest in the land described in subsection (a)(1) (other than by a disposition to a member of his family), orCommentsClose CommentsPermalink





‘(B) the qualified heir uses any portion of the land described in subsection (a)(1) in a manner which violates the terms of such easement,CommentsClose CommentsPermalink





then there is hereby imposed a recapture tax on such disposition or use.CommentsClose CommentsPermalink





‘(2) AMOUNT OF RECAPTURE TAX- The amount of the tax imposed by paragraph (1) shall be the excess of--CommentsClose CommentsPermalink





‘(A) the tax which would have been imposed by section 2001 on the estate of the decedent, determined as if--CommentsClose CommentsPermalink





‘(i) section 2031(c) did not apply, andCommentsClose CommentsPermalink





‘(ii) as if such estate included the interest described in paragraph (1)(A) or the portion described in paragraph (1)(B), as applicable,CommentsClose CommentsPermalink





reduced by the credits allowable against such tax, overCommentsClose CommentsPermalink





‘(B) the tax imposed by section 2001 on the estate of the decedent, reduced by such credits.CommentsClose CommentsPermalink





For purposes of this paragraph, the value of any interest in land or portion of land subject to a qualified conservation easement shall be the fair market value of such interest or portion as of the date of the disposition or use of such interest or portion described in paragraph (1).CommentsClose CommentsPermalink





‘(3) REGULATIONS- The Secretary may prescribe such regulations as may be necessary or appropriate to carry out this subsection, including regulations requiring record keeping and information reporting, except that the Secretary may not impose a lien on the estate of the decedent, land subject to a qualified conservation easement, or qualified conservation easement for such purposes.CommentsClose CommentsPermalink





‘(c) Land Subject to Qualified Conservation Easement- For purposes of this section, the terms ‘land subject to a qualified conservation easement’ and ‘qualified conservation easement’ have the meanings given such terms by section 2031(c)(8).CommentsClose CommentsPermalink





‘(d) Election- The election under this subsection shall be made on or before the due date (including extensions) for filing the return of tax imposed by section 2001 and shall be made on such return.’.CommentsClose CommentsPermalink





(b) Clerical Amendment- The table of sections for subchapter B of chapter 62 of such Code is amended by adding at the end the following new item:CommentsClose CommentsPermalink





‘Sec. 2033B. Temporary exclusion of qualified conservation easements.’.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to estates of decedents dying after the date of the enactment of this Act.CommentsClose CommentsPermalink

SEC. 4. MODIFICATION OF DEFINITION OF QUALIFIED CONSERVATION EASEMENT.

(a) In General- Subparagraph (B) of section 2031(c)(8) of the Internal Revenue Code of 1986 is amended by striking ‘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’.CommentsClose CommentsPermalink





(b) Effective Date- The amendments made by this section shall apply to estates of decedents dying after the date of the enactment of this Act.CommentsClose CommentsPermalink

SEC. 5. MODIFICATION OF RULES RELATING TO VALUATION OF CERTAIN FARM, ETC., REAL PROPERTY.

(a) Disposition of Interest Subject to Qualified Conservation Easement- Subparagraph (A) of section 2032A(c)(1) of the Internal Revenue Code of 1986 is amended by striking ‘family)’ and inserting ‘family or by a disposition to any other person when such interest in real property is subject to a qualified conservation easement (as defined in section 2031(c)(8)(B)))’.CommentsClose CommentsPermalink





(b) Woodlands Subject to Management Plan- Paragraph (2) of section 2032A(c) of such Code is amended by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





‘(F) EXCEPTION FOR WOODLANDS SUBJECT TO MANAGEMENT PLAN- Subparagraph (E) shall not apply to any disposition or severance of standing timber on a qualified woodland that is made pursuant to--CommentsClose CommentsPermalink





‘(i) a written forest management plan developed by a credentialed professional forester,CommentsClose CommentsPermalink





‘(ii) a written forest management plan that is equivalent to a forest stewardship plan, orCommentsClose CommentsPermalink





‘(iii) a third-party audited forest certification system or similar land management protocol.’.CommentsClose CommentsPermalink





(c) Sale of Conservation Easement Not a Disposition- Paragraph (8) of section 2032A(c) of such Code is amended--CommentsClose CommentsPermalink





(1) by striking ‘A qualified’ and inserting ‘Neither a qualified’, andCommentsClose CommentsPermalink





(2) by inserting ‘nor a sale of a conservation easement limiting the use of qualified real property’ after ‘otherwise’.CommentsClose CommentsPermalink





(d) Farm Defined- Paragraph (4) of section 2032A(e) of such Code is amended by striking ‘orchards and woodlands’ and inserting ‘orchards, woodlands, and properties managed to provide habitat in support of fish and wildlife dependent recreation’.CommentsClose CommentsPermalink





(e) Farming Purpose Defined- Paragraph (5) of section 2032A(e) of such Code is amended--CommentsClose CommentsPermalink





(1) in subparagraph (A) by inserting ‘, silvicultural,’ after ‘agricultural’, andCommentsClose CommentsPermalink





(2) by striking ‘and’ at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting ‘, and’, and by adding at the end the following:CommentsClose CommentsPermalink





‘(D) creating, restoring, enhancing, or maintaining habitat for the purpose of generating revenue from nature-oriented recreational opportunities, including hunting, fishing, wildlife observation, and related fish and wildlife dependent recreation.’.CommentsClose CommentsPermalink





(f) Effective Date- The amendments made by this section shall apply to estates of decedents dying after the date of the enactment of this Act.CommentsClose CommentsPermalink