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109th CONGRESS
2nd Session
S.2187
To amend the Internal Revenue Code of 1986 to provide economic
incentives for the preservation of open space and conservation of natural
resources, and for other purposes.
IN THE SENATE OF THE UNITED STATES
JANUARY 25, 2006
Mr. ISAKSON introduced the following bill; which was referred to the
Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to provide economic
incentives for the preservation of open space and conservation of natural
resources, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) SHORT TITLE- This Act may be cited as the Paul Coverdell Homestead
Open Space Preservation and Conservation Act of 2006'.
(b) AMENDMENT OF 1986 CODE- Except as otherwise expressly provided,
whenever in this Act an amendment or repeal is expressed in terms of
an amendment to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provision of the
Internal Revenue Code of 1986.
SEC. 2. FINDINGS AND PURPOSE.
(a) FINDINGS- Congress finds the following:
(1) Tax and economic policies have for a sustained period of time
inadvertently created financial difficulties for our Nation's farming
and ranching families that, among other negative impacts, has forced
a significant number of them to liquidate their land holdings.
(2) This has particularly been the case in areas surrounding growing
urban centers and resort destinations.
(3) This has fragmented many of our Nation's large landscapes and
disrupted many communities that historically derived their cultural
and economic identities from the land.
(4) The impact of this has been to deprive many areas of open green
space, which in turn has not only negatively affected our human settlements
through the resulting sprawl, but has also dramatically reduced the
amount of sustaining habitat for our natural communities of plants
and animals.
(b) PURPOSE- The purpose of this Act is to provide an economic mechanism
that will restore and conserve our Nation's natural estate in the form
of forests, farms, ranches, and wetlands while protecting our waterways
and our forests and open space in a manner that keeps them subject to
private ownership and supportive of our surviving but threatened natural
communities of plants and animals.
SEC. 3. QUALIFIED CONSERVATION CREDIT.
(a) IN GENERAL- Subpart B of part IV of subchapter A of chapter 1 (relating
to other credits) is amended by adding at the end the following new
section:
SEC. 30B. QUALIFIED CONSERVATION CREDIT.
(a) GENERAL RULE- There shall be allowed as a credit against the tax
imposed by this chapter, in the case of a qualified conservation organization,
the amount of the taxpayer's qualified conservation expenditures for
the taxable year.
(b) QUALIFIED CONSERVATION EXPENDITURES- For purposes of this section--
(1) IN GENERAL- The term qualified conservation expenditures' means
the sum of the qualified conservation organization's--
(B) ENDOWMENT- The term endowment' means a restricted fund held
in a segregated account, the income and realized appreciation of
which may be expended solely for the purposes designated under this
section, and which may be invested solely in qualified investments
(as defined in section 501(c)(21)(D)(ii)).
(c) QUALIFIED CONSERVATION ORGANIZATION- For purposes of this section,
the term qualified conservation organization' means, with respect to
any taxable year--
(2) a limited partnership, all the general partners of which are
organizations described in paragraph (1), or
(3) a limited liability company, all the managers of which are organizations
described in paragraph (1),
with respect to which neither the seller of the qualified real property
interest nor any party related or subordinate to the seller (within
the meaning of section 672(c)) would be a disqualified person (as defined
in section 4946) if the organization were a private foundation.
(d) QUALIFIED REAL PROPERTY INTEREST- For purposes of this section,
the term qualified real property interest' has the meaning given such
term by section 170(h)(2)(C).
(e) EXCLUSIVELY FOR CONSERVATION PURPOSES- For purposes of this section,
the term exclusively for conservation purposes' has the meaning given
such term by section 170(h)(5), except that an acquisition shall not
be treated as exclusively for conservation purposes unless the instrument
conveying the qualified real property interest expressly provides that
the conservation purposes may be enforced by both the attorney general
of the State in which the real property is located and the qualified
conservation organization.
(f) APPRAISED VALUE- For purposes of this section, the term appraised
value' means the fair market value as determined by a qualified appraisal
(as defined in section 155(a)(4) of the Deficit Reduction Act of 1984).
(g) LIMITATION BASED ON AMOUNT OF TAX- The credit allowed under subsection
(a) shall not exceed the taxpayer's liability for income tax (including
unrelated business income tax) for the taxable year.
(h) LIMITATION ON AGGREGATE CREDIT ALLOWABLE WITH RESPECT TO ACQUISITIONS
OF QUALIFIED REAL PROPERTY INTERESTS LOCATED IN A STATE-
(1) CREDIT MAY NOT EXCEED CREDIT AMOUNT ALLOCATED TO ACQUISITION
OF QUALIFIED REAL PROPERTY INTEREST-
(B) STATE CEILING INITIALLY ALLOCATED TO STATE CONSERVATION CREDIT
AGENCIES- Except as provided in subparagraphs (F) and (G), the State
conservation credit ceiling for each calendar year shall be allocated
to the conservation credit agency of such State. If there is more
than 1 conservation credit agency of a State, all such agencies
shall be treated as a single agency.
(I) an amount equal to the aggregate annual credit multiplied
by a fraction, the numerator of which is the amount of land
located in such State that is either used for agricultural purposes
or constitutes private forest land and the denominator of which
is the amount of land in all States that is either used for
agricultural purposes or constitutes private forest land, or
For purposes of clause (iii), the unused State conservation credit
ceiling for any calendar year is the excess (if any) of the sum
of the amounts described in clauses (i), (ii), and (iv) over the
aggregate conservation credit dollar amount allocated for such year.
For purposes of clause (iv), the amount of State conservation credit
ceiling returned in the calendar year equals the conservation credit
dollar amount previously allocated within the State to any proposed
acquisition of a qualified real property interest which is not acquired
within the period required by the terms of the allocation or to
any proposed acquisition of a qualified real property interest with
respect to which an allocation is canceled by mutual consent of
the conservation credit agency and the qualified conservation organization
receiving the allocation.
(D) UNUSED AGGREGATE ANNUAL CREDIT- Any portion of the aggregate
annual credit for a calendar year that is not allocated to a State's
conservation credit ceiling because of the 4 percent limitation
under subparagraph (C)(i)(II) shall be allocated by the Secretary
among the remaining States, subject to such 4 percent limitation,
in proportion to their respective land used for agricultural purposes
and private forest land.
(ii) UNUSED CONSERVATION CREDIT CARRYOVER- For purposes of this
paragraph, the unused conservation credit carryover of a State
for any calendar year is the excess (if any) of the unused State
conservation credit ceiling for such year (as defined in subparagraph
(C)(iii)) over the excess (if any) of--
(iv) QUALIFIED STATE- For purposes of this subparagraph, the
term qualified State' means, with respect to a calendar year,
any State--
(I) which has adopted a statewide conservation plan designed
to preserve the natural estate in the form of forests, farms,
ranches, and wetlands located within the boundaries of that
State,
(ii) COORDINATION WITH OTHER ALLOCATIONS- In the case of any
state which contains 1 or more constitutional home rule cities,
for purposes of applying this paragraph with respect to conservation
credit agencies in such State other than constitutional home rule
cities, the State conservation credit ceiling for any calendar
year shall be reduced by the aggregate conservation credit dollar
amounts determined for such year for all constitutional home rule
cities in such State.
(ii) PRIVATE FOREST LAND- The term private forest land' means
the number of acres classified as private forest land in the 1997
Forest Inventory and Analysis conducted by the United States Forest
Service, excluding any acres so classified therein that are also
included as land in farms in the 1997 Census of Agriculture described
in clause (i).
(B) AGENCY ALLOCATIONS IN EXCESS OF LIMIT- If the aggregate conservation
credit dollar amounts allocated by a conservation credit agency
for any calendar year exceed the portion of the State conservation
credit ceiling allocated to such agency for such calendar year,
the conservation credit dollar amounts so allocated shall be reduced
(to the extent of such excess) for acquisitions of qualified real
property interests in the reverse order in which the allocations
of such amounts were made.
(4) CONSERVATION CREDIT AGENCY- For purposes of this subsection,
the term conservation credit agency' means any agency authorized to
carry out this subsection.
(i) REGULATIONS- Except as provided in subsection (h)(2)(I), the Secretary
shall prescribe such regulations as may be necessary to carry out the
purposes of this section.
(j) TERMINATION- Subparagraph (A) of subsection (h)(1) shall not apply
to any amount allocated after December 31, 2010.'.
(b) RECOGNITION OF GAIN- Section 1001 (relating to determination of
amount of and recognition of gain or loss) is amended by adding at the
end the following new subsection:
(f) QUALIFIED REAL PROPERTY INTERESTS- Gain shall be recognized on
the sale of a qualified real property interest (as defined in section
30B(d)) to a qualified conservation organization (as defined in section
30B(c)) exclusively for conservation purposes (as defined in section
30B(e)) only to the extent that the amount realized on the sale exceeds
the taxpayer's adjusted basis in the entire property to which the qualified
real property interest relates.'.
(c) BASIS ADJUSTMENT- Section 1016 (relating to adjustments to basis)
is amended by redesignating subsection (e) as subsection (f) and by
inserting after subsection (d) the following new subsection:
(e) ADJUSTMENTS TO BASIS OF CERTAIN REAL PROPERTY- If the taxpayer
has sold a qualified real property interest in a transaction to which
section 1001(f) applies, then the taxpayer's basis in the remaining
property shall be reduced (but not below zero) by the amount realized
on the sale.'.
(d) CONFORMING AMENDMENTS-
(2) UNRELATED BUSINESS INCOME TAX- Section 511(a)(1) is amended by
striking section 11.' and inserting section 11, less any credits to
which the organization is entitled under section 30B.'.
(3) DENIAL OF CHARITABLE CONTRIBUTION DEDUCTION- Section 170(e) is
amended by adding at the end the following new paragraph:
(7) SPECIAL RULE FOR CONTRIBUTIONS OF INTERESTS IN QUALIFIED CONSERVATION
ORGANIZATIONS- No deduction shall be allowed for the contribution
of an interest in a qualified conservation organization (as defined
in section 30B(c)) that has acquired 1 or more qualified real property
interests in transactions to which section 30B applies.'.
(4) CLASSIFICATION AS PARTNERSHIP- Section 761(a) is amended by adding
at the end the following new sentence: Such term also includes an
organization described in either section 30B(c)(2) or section 30B(c)(3).'.
(5) CLERICAL AMENDMENT- The table of sections for subpart B of part
IV of subchapter A of chapter 1 is amended by adding at the end the
following new item:
Sec. 30B. Qualified conservation credit.'.
(e) EFFECTIVE DATE- The amendments made by this section shall apply
to taxable years beginning after December 31, 2005.
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