,i  #aacth ,,congress  #ast ,session    
,h4 ,r4 #dg  ,,in ,,the ,,house ,,of    
,,representatives  ,january #c1 #bjac   
,mr4 ,bishop of ,new ,york 7for himself 
and ,mr4 ,hanna7 introduced the         
following bill2 which was referred to   
the ,committee on ,ways and ,means  ,a  
,,bill  ,to amend the ,internal ,revenue
 ,code of #aihf to allow an unlimited   
exclusion from transfer taxes for       
certain farmland and land of            
conservation value1 and for other       
purposes4  #a4 ,short title ,this ,act  
may be cited as the ,farmland           
,preservation and ,land ,conservation   
,act of #bjac4  #b4 ,transfer tax       
exclusion for certain farmland and land 
of conservation value  7a7 ,estate tax  
7#a7 ,in general ,part ,,iv of          
subchapter ,a of chapter #aa of the     
,internal ,revenue ,code of #aihf       
7relating to gross estate7 is amended by
 inserting after section #bjeh the      
following new section3  #bjei4 ,farm and
 conservation land  7a7 ,in general ,for

 purposes of the tax imposed by section 
#bjja1 the value of the taxable estate  
shall be determined by deducting from   
the value of the gross estate an amount 
equal to the adjusted value of the      
qualified farm or conservation land     
included in the estate4  7b7 ,estates to
 which section applies ,this section    
shall apply to an estate if--  7#a7 the 
decedent was 7at the date of the        
decedent's death7 a citizen or resident 
of the ,united ,states1 and  7#b7 the   
executor elects the application of this 
section and files the agreement referred
 to in subsection 7d77#b7 with respect  
to the qualified farm or conservation   
land4  7c7 ,definitions ,for purposes of
 this section--  7#a7 ,qualified farm or
 conservation land ,the term qualified  
farm or conservation land means any real
 property--  7,a7 which is located in   
the ,united ,states1  7,b7 which1 on the
 date of the decedent's death1 was being
 used--  7i7 as a farm for farming      
purposes 7within the meaning of section 

#bjcb;,a7e771 or  7ii7 exclusively for  
conservation purposes 7within the       
meaning of section #agj7;h771  7,c7 with
 respect to which there is a recorded   
covenant which prevents any use of such 
land which is inconsistent with the uses
 described in subparagraph 7,b71 and    
7,d7 which is designated in the         
agreement referred to in subsection     
7d77#b74  7#b7 ,adjusted value ,the term
 adjusted value means the value of the  
qualified farm or conservation land for 
purposes of this chapter1 reduced by the
 amount allowable as a deduction under  
paragraph 7#d7 of section #bjec7;a74    
7d7 ,election2 agreement  7#a7 ,election
 ,the election under this section shall 
be made on the return of the tax imposed
 by section #bjja4 ,such election shall 
be made in such manner as the ,secretary
 shall by regulations prescribe4 ,such  
an election1 once made1 shall be        
irrevocable4  7#b7 ,agreement ,the      
agreement referred to in this paragraph 
is a written agreement signed by each   

person in being who has an interest     
7whether or not in possession7 in any   
property designated in such agreement   
consenting to the application of        
subsection 7e7 with respect to such     
property4  7#c7 ,modification of        
election and agreement permitted ,the   
procedures prescribed under section     
#bjcb;,a7d77#c7 shall apply for purposes
 of this subsection4  7e7 ,tax treatment
 of dispositions and inconsistent uses  
,in the case of a decedent's estate     
which includes qualified farm or        
conservation land with respect to which 
there is a covenant described in        
subsection 7c77#a77;,c7 7including such 
a covenant made by a prior decedent7--  
7#a7 ,imposition of additional estate   
tax ,if1 at any time after the          
decedent's death and before the death of
 the heir--  7,a7 the heir disposes of  
any interest 7other than by a qualified 
conservation contribution 7as defined in
 section #agj7;h777 in qualified farm or
 conservation land and the person       

acquiring such interest is not subject  
to the covenant described in subsection 
7c77#a77;,c71 or  7,b7 the heir uses    
such land in any manner which violates  
the terms of such covenant1  then1 there
 is hereby imposed an additional estate 
tax4  7#b7 ,amount of additional tax    
7,a7 ,in general ,the amount of the     
additional tax imposed by paragraph 7#a7
 with respect to any interest shall be  
the amount equal to the sum of--  7i7   
the adjusted tax difference with respect
 to the estate1 and  7ii7 interest at   
the underpayment rate established under 
section #ffba on the amount determined  
under clause 7i7 for the period         
beginning on the due date for filing the
 estate tax return4  7,b7 ,adjusted tax 
difference with respect to estate ,for  
purposes of this subsection1 the term   
adjusted tax difference with respect to 
the estate means the excess of--  7i7   
what would have been the estate tax     
liability if the fair market value of   
the interest at the time of the         

disposition or use described in         
paragraph 7#a71 over  7ii7 the estate   
tax liability4  ,for purposes of this   
subparagraph1 the term estate tax       
liability means the tax imposed by      
section #bjja reduced by the credits    
allowable against such tax4  7#c7       
,certain additional rules to apply      
,rules similar to the rules of          
paragraphs 7#b77;,d71 7#b77;,e71 7#c71  
7#d71 7#e71 and 7#h7 of section         
#bjcb;,a7c7 shall apply for purposes of 
this subsection4  7#d7 ,income tax      
treatment of dispositions ,for purposes 
of chapter #a1 in any case in which an  
additional tax is imposed by this       
subsection by reason of any disposition 
or use of an interest1 such interest 7if
 not otherwise disposed of in a         
transaction in which gain is recognized7
 shall be treated as sold at its fair   
market value at the time of the         
disposition or use1 and gain shall be   
recognized notwithstanding any provision
 of subtitle ,a4  7f7 ,basis ,for       

purposes of this title1 the basis of any
 qualified farm or conservation land    
which is included in the estate of a    
decedent pursuant to subsection 7a7     
shall be the adjusted basis of such     
qualified farm or conservation land on  
the date of the decedent's death4  7g7  
,certain additional rules ,to apply ,for
 purposes of this section1 rules similar
 to the following rules shall apply3    
7#a7 ,certain real property included    
,section #bjcb;,a7e77#c74  7#b7         
,definitions of farm and farming        
purposes ,paragraphs 7#d7 and 7#e7 of   
section #bjcb;,a7e74  7#c7 ,property    
acquired from decedent ,section         
#bjcb;,a7e77#i74  7#d7 ,community       
property ,section #bjcb;,a7e77#aj74     
7#e7 ,bond in lieu of personal liability
 ,section #bjcb;,a7e77#aa74  7#f7       
,special rule for woodlands ,section    
#bjcb;,a7e77#ac74  7#g7 ,statute of     
limitation ,section #bjcb;,a7f74  7#h7  
,special rules for involuntary          
conversions of real property ,section   

#bjcb;,a7h74  7#i7 ,exchanges of        
qualified real property ,section        
#bjcb;,a7i74  7h7 ,cross reference ,see 
section #fcbd;,c for special lien on    
farm and conservation land4  4  7#b7    
,special lien for farm and conservation 
land ,part ,,ii of subchapter ,c of     
chapter #fd of such ,code 7relating to  
liens7 is amended by inserting after    
section #fcbd;,b the following new      
section3  #fcbd;,c4 ,special lien on    
farm and conservation land  7a7 ,general
 rule ,in the case of qualified farm or 
conservation land 7within the meaning of
 section #bjei7;c77#a77 with respect to 
which an election is in effect under    
section #bjei7;b77#b7 or section        
#bebd7;a7 or pursuant to section        
#bfaa7;b77#b71 an amount equal to the   
adjusted value attributable to such land
 7within the meaning of section         
#bjei7;c77#b77 shall be a lien in favor 
of the ,united ,states on such land4    
7b7 ,period of lien ,the lien imposed by
 this section shall arise at the time an

 election is filed under section #bjei  
and shall continue with respect to such 
qualified farm or conservation land     
until the earlier of--  7#a7 such land  
is transferred to a qualified           
organization 7as defined in section     
#agj7;h77#c771  7#b7 the liability for  
tax under subsection 7e7 of section     
#bjei with respect to such land has been
 satisfied or has become unenforceable  
by reason of lapse of time1 or  7#c7 it 
is established to the satisfaction of   
the ,secretary that no further tax      
liability may arise under section       
#bjei7;e7 with respect to such land4    
7c7 ,certain rules and definitions made 
applicable  7#a7 ,in general ,the rule  
set forth in paragraphs 7#a71 7#c71 and 
7#d7 of section #fcbd;,a7d7 shall apply 
with respect to the lien imposed by this
 section as if it were a lien imposed by
 section #fcbd;,a4  7#b7 ,qualified farm
 or conservation land ,for purposes of  
this section1 the term qualified farm or
 conservation land includes qualified   

replacement property 7within the meaning
 of section #bjcb;,a7h77#c77;,b77 and   
qualified exchange property 7within the 
meaning of section #bjcb;,a7i77#c774    
7d7 ,substitution of security for lien  
,to the extent provided in regulations  
prescribed by the ,secretary1 the       
furnishing of security may be           
substituted for the lien imposed by this
 section4  4  7b7 ,conforming and       
clerical amendments  7#a7 ,section      
#ajaf7;a7 of such ,code is amended by   
striking and at the end of paragraph    
7#cf71 by striking the period at the end
 of paragraph 7#cg7 and inserting 1 and1
 and by inserting after paragraph 7#cg7 
the following new paragraph3  7#ch7 to  
the extent provided in section          
#bjei7;f74  4  7#b7 ,the table of       
sections for part ,,iv of subchapter ,a 
of chapter #aa of such ,code is amended 
by inserting after the item relating to 
section #bjeh the following new item3   
,sec4 #bjei4 ,farm and conservation     
land4  4  7#c7 ,the table of sections   

for part ,,ii of subchapter ,c of       
chapter #fd of such ,code is amended by 
inserting after the item relating to    
section #fcbd;,b the following new item3
  ,sec4 #fcbd;,c4 ,special lien on farm 
and conservation land4  4  7c7 ,gift tax
  7#a7 ,in general ,subchapter ,c of    
chapter #ab of subtitle ,b of such ,code
 7deductions7 is amended by             
redesignating section #bebd as section  
#bebe and inserting after section #bebc 
the following new section3  #bebd4 ,gift
 of farm and conservation land  7a7 ,in 
general ,in computing taxable gifts for 
the calendar year1 there shall be       
allowed as a deduction in the case of a 
citizen or resident the adjusted value  
of all gifts made during such year which
 are qualified farm or conservation land
 if the donee elects the application of 
this section and files the agreement    
referred to in subsection 7c77#b7 with  
respect to the qualified farm or        
conservation land4  7b7 ,definitions    
,for purposes of this section--  7#a7   

,qualified farm or conservation land    
,the term qualified farm or conservation
 land means any real property--  7,a7   
which is located in the ,united ,states1
  7,b7 which1 on the date of the gift1  
was being used--  7i7 as a farm for     
farming purposes 7within the meaning of 
section #bjcb;,a7e771 or  7ii7          
exclusively for conservation purposes   
7within the meaning of section          
#agj7;h771  7,c7 with respect to which  
there is a recorded covenant which      
prevents any use of such land which is  
inconsistent with the uses described in 
subparagraph 7,b71 and  7,d7 which is   
designated in the agreement referred to 
in subsection 7c77#b74  7#b7 ,adjusted  
value ,the term adjusted value means the
 value of the qualified farm or         
conservation land for purposes of this  
chapter1 reduced by the amount allowable
 as a deduction under paragraph 7#d7 of 
section #bjec7;a74  7c7 ,election2      
agreement  7#a7 ,election ,the election 
under this section shall be made in such

 manner as the ,secretary shall by      
regulations prescribe4 ,such an         
election1 once made1 shall be           
irrevocable4  7#b7 ,agreement ,the      
agreement referred to in this paragraph 
is a written agreement signed by each   
person in being who has an interest     
7whether or not in possession7 in any   
property designated in such agreement   
consenting to the application of        
subsection 7d7 with respect to such     
property4  7#c7 ,modification of        
election and agreement permitted ,the   
procedures prescribed under section     
#bjcb;,a7d77#c7 shall apply for purposes
 of this subsection4  7d7 ,tax treatment
 of dispositions and inconsistent uses  
,in the case of a decedent's estate     
which includes qualified farm or        
conservation land with respect to which 
there is a covenant described in        
subsection 7c77#a77;,c7 7including such 
a covenant made by a prior decedent7--  
7#a7 ,imposition of additional gift tax 
,if1 at any time after the gift         

described in subsection 7a7 and before  
the death of the donee--  7,a7 the donee
 disposes of any interest 7other than by
 a qualified conservation contribution  
7as defined in section #agj7;h777 in    
qualified farm or conservation land and 
the person acquiring such interest is   
not subject to the covenant described in
 subsection 7b77#a77;,c71 or  7,b7 the  
donee uses such land in any manner which
 violates the terms of such covenant1   
then1 there is hereby imposed an        
additional gift tax4  7#b7 ,amount of   
additional tax  7,a7 ,in general ,the   
amount of the additional tax imposed by 
paragraph 7#a7 with respect to any      
interest shall be the amount equal to   
the sum of--  7i7 the adjusted tax      
difference with respect to the gift1 and
  7ii7 interest at the underpayment rate
 established under section #ffba on the 
amount determined under clause 7i7 for  
the period beginning on the date of such
 gift4  7,b7 ,adjusted tax difference   
with respect to gift ,for purposes of   

this subsection1 the term adjusted tax  
difference with respect to the gift     
means the excess of--  7i7 what would   
have been the gift tax liability if the 
fair market value of the interest at the
 time of the disposition or use         
described in paragraph 7#a71 over  7ii7 
the gift tax liability4  ,for purposes  
of this subparagraph1 the term gift tax 
liability means the tax imposed by      
section #beja reduced by the credits    
allowable against such tax4  7#c7       
,certain additional rules to apply      
,rules similar to the rules of          
paragraphs 7#b77;,d71 7#b77;,e71 7#c71  
7#d71 7#e71 and 7#h7 of section         
#bjcb;,a7c7 shall apply for purposes of 
this subsection4  7#d7 ,income tax      
treatment of dispositions ,for purposes 
of chapter #a1 in any case in which an  
additional tax is imposed by this       
subsection by reason of any disposition 
or use of an interest1 such interest 7if
 not otherwise disposed of in a         
transaction in which gain is recognized7

 shall be treated as sold at its fair   
market value at the time of the         
disposition or use1 and gain shall be   
recognized notwithstanding any provision
 of subtitle ,a4  7e7 ,certain          
additional rules ,to apply ,for purposes
 of this section1 rules similar to the  
following rules shall apply3  7#a7      
,certain real property included ,section
 #bjcb;,a7e77#c74  7#b7 ,definitions of 
farm and farming purposes ,paragraphs   
7#d7 and 7#e7 of section #bjcb;,a7e74   
7#c7 ,bond in lieu of personal liability
 ,section #bjcb;,a7e77#aa74  7#d7       
,special rule for woodlands ,section    
#bjcb;,a7e77#ab74  7#e7 ,statute of     
limitation ,section #bjcb;,a7f74  7#f7  
,special rules for involuntary          
conversions of real property ,section   
#bjcb;,a7h74  7#g7 ,exchanges of        
qualified real property ,section        
#bjcb;,a7i74  7f7 ,cross reference ,see 
section #fcbd;,c for special lien on    
farm and conservation land4  4  7#b7    
,conforming amendment ,section #bebe of 

such ,code1 as amended by paragraph     
7#a71 is amended by striking sections   
#bebb and #bebc and inserting sections  
#bebb1 #bebc1 and #bebd4  7#c7 ,clerical
 amendment ,the table of sections for   
such subchapter is amended by striking  
the last item and inserting the         
following new items3  ,sec4 #bebd4 ,gift
 of farm and conservation land4 ,sec4   
#bebe4 ,extent of deductions4  4  7d7   
,generation skipping tax  7#a7          
,exclusion ,subsection 7b7 of section   
#bfaa of such ,code 7relating to certain
 transfers excluded7 is amended by      
redesignating paragraph 7#b7 as         
paragraph 7#c7 and by inserting after   
paragraph 7#a7 the following new        
paragraph3  7#b7 any transfer which1 if 
made inter vivos by an individual1 would
 be treated as a deduction under section
 #bebd 7relating to gift of farm and    
conservation land71 or  4  7#b7         
,applicable rules ,subsection 7b7 of    
section #bfaa of such ,code is amended  
by adding at the end the following flush

 sentence3  ,for purposes of paragraph  
7#b71 rules similar to the rules of     
section #bebd shall apply4 4  7e7       
,effective date ,the amendments made by 
this section shall apply to estates of  
decedents dying1 gifts made1 and        
generation-skipping transfers after     
,december #ca1 #bjab4