S 1392 IS

To amend the Internal Revenue Code of 1986 to provide tax incentives for the voluntary conservation of endangered species, and for other purposes.

July 19, 1999

Mr. BAUCUS introduced the following bill; which was read twice and referred to the Committee on Finance

To amend the Internal Revenue Code of 1986 to provide tax incentives for the voluntary conservation of endangered species, 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 `Species Conservation Tax Act of 1999'.

(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. TAX EXCLUSION FOR COST-SHARING PAYMENTS UNDER PARTNERS FOR WILDLIFE PROGRAM.

(a) IN GENERAL- Section 126(a) (relating to certain cost-sharing payments) is amended by redesignating paragraph (10) as paragraph (11) and by inserting after paragraph (9) the following:

`(10) The Partners for Fish and Wildlife Program authorized by the Fish and Wildlife Act of 1956 (16 U.S.C. 742a et seq.).'

(b) EFFECTIVE DATE- The amendments made by this section shall apply to payments received after the date of the enactment of this Act.

SEC. 3. ENHANCED DEDUCTION FOR THE DONATION OF A CONSERVATION EASEMENT.

(a) IN GENERAL- Subparagraph (A) of section 170(h)(4) (defining conservation purpose) is amended by striking `or' at the end of clause (iii), by striking the period at the end of clause (iv) and inserting `, or', and by adding at the end the following:

`(v) the conservation of a species designated by the Secretary of the Interior or the Secretary of Commerce under the Endangered Species Act of 1973 (16 U.S.C. 1531 et seq) as endangered or threatened, proposed by such Secretary for designation as endangered or threatened, or identified by such Secretary as a candidate for such designation, provided the property is not required, as of the date of contribution, to be used for such purpose other than by reason of the terms of contribution.'

(b) ENHANCED DEDUCTIONS- Subsection (e) of section 170 (defining qualified conservation contribution) is amended by adding at the end the following:

`(7) SPECIAL RULES FOR CONTRIBUTIONS RELATED TO CONSERVATION OF SPECIES-

`(A) IN GENERAL- In the case of a qualified conservation contribution by an individual for the conservation of endangered or threatened species, proposed species, or candidate species under (h)(4)(v):

`(i) 50 PERCENT LIMITATION TO APPLY- Such a contribution shall be treated for the purposes of this section as described in subsection (b)(l)(A).

`(ii) 20-YEAR CARRY FORWARD- Subsection (d)(1) shall be applied by substituting `20 years' for `5 years' each place it appears and with appropriate adjustments in the application of subparagraph (A)(ii) thereof.

`(iii) UNUSED DEDUCTION CARRYOVER ALLOWED ON TAXPAYER'S LAST RETURN- If the taxpayer dies before the close of the last taxable year for which a deduction could have been allowed under subsection (d)(1), any portion of the deduction for such contribution which has not been allowed shall be allowed as a deduction under subsection (a) (without regard to subsection (b)) for the taxable year in which such death occurs or such portion may be used as a deduction against the gross estate of the taxpayer.'

(c) EFFECTIVE DATE- The amendments made by this section shall apply to contributions made after the date of the enactment of this Act.

SEC. 4. EXCLUSION FROM ESTATE TAX FOR REAL PROPERTY SUBJECT TO ENDANGERED SPECIES CONSERVATION AGREEMENT.

(a) IN GENERAL- Part IV of subchapter A of chapter 11 of the Internal Revenue Code of 1986 (relating to taxable estate) is amended by adding at the end the following new section:

`SEC. 2058. CERTAIN REAL PROPERTY SUBJECT TO ENDANGERED SPECIES CONSERVATION AGREEMENT.

`(a) GENERAL RULE- For purposes of the tax imposed by section 2001, the value of the taxable estate shall be determined by deducting from the value of the gross estate an amount equal to lesser of--

`(1) the adjusted value of real property included in the gross estate which is subject to an endangered species conservation agreement, or

`(2) $10,000,000.

`(b) PROPERTY SUBJECT TO AN ENDANGERED SPECIES CONSERVATION AGREEMENT- For purposes of this section--

`(1) IN GENERAL- Real property shall be treated as subject to an endangered species conservation agreement if--

`(A) such property was owned by the decedent or a member of the decedent's family at all times during the 3-year period ending on the date of the decedent's death,

`(B) each person who has an interest in such property (whether or not in possession) has entered into--

`(i) an endangered species conservation agreement with respect to such property, and

`(ii) a written agreement with the Secretary consenting to the application of subsection (d), and

`(C) the executor of the decedent's estate--

`(i) elects the application of this section, and

`(ii) files with the Secretary such endangered species conservation agreement.

`(2) ADJUSTED VALUE-

`(A) IN GENERAL- The adjusted value of any real property shall be its value for purposes of this chapter, reduced by--

`(i) any amount deductible under section 2055(f) with respect to the property, and

`(ii) any acquisition indebtedness with respect to the property.

`(B) ACQUISITION INDEBTEDNESS- For purposes of this paragraph, the term `acquisition indebtedness' means, with respect to any real property, the unpaid amount of--

`(i) the indebtedness incurred by the donor in acquiring such property,

`(ii) the indebtedness incurred before the acquisition of such property if such indebtedness would not have been incurred but for such acquisition,

`(iii) the indebtedness incurred after the acquisition of such property if such indebtedness would not have been incurred but for such acquisition and the incurrence of such indebtedness was reasonably foreseeable at the time of such acquisition, and

`(iv) the extension, renewal, or refinancing of an acquisition indebtedness.

`(c) ENDANGERED SPECIES CONSERVATION AGREEMENT- For purposes of this section--

`(1) IN GENERAL- The term `endangered species conservation agreement' means a written agreement entered into with the Secretary of the Interior or the Secretary of Commerce--

`(A) which commits each person who signed such agreement to carry out on the real property activities or practices not otherwise required by law or to refrain from carrying out on such property activities or practices that could otherwise be lawfully carried out and includes--

`(i) objective and measurable species of concern conservation goals,

`(ii) site-specific and other management measures necessary to achieve those goals, and

`(iii) objective and measurable criteria to monitor progress toward those goals,

`(B) which is certified by such Secretary as providing a major contribution to the conservation of a species of concern, and

`(C) which is for a term that such Secretary determines is sufficient to achieve the purposes of the agreement, but not less than 10 years beginning on the date of the decedent's death.

`(2) SPECIES OF CONCERN- The term `species of concern' means any species designated by the Secretary of the Interior or the Secretary of Commerce under the Endangered Species Act of 1973 (16 U.S.C. 1531 et seq) as endangered or threatened, proposed by such Secretary for designation as endangered or threatened, or identified by such Secretary as a candidate for such designation.

`(3) ANNUAL CERTIFICATION TO THE SECRETARY BY THE SECRETARY OF THE INTERIOR OR THE SECRETARY OF COMMERCE OF THE STATUS OF ENDANGERED SPECIES CONSERVATION AGREEMENTS- If the executor elects the application of this section, the executor shall promptly give written notice of such election to the Secretary of the Interior or the Secretary of Commerce. The Secretary of the Interior or the Secretary of Commerce shall thereafter annually certify to the Secretary that the endangered species conservation agreement applicable to any property for which such election has been made remains in effect and is being satisfactorily complied with.

`(d) RECAPTURE OF TAX BENEFIT IN CERTAIN CASES-

`(1) DISPOSITION OF INTEREST OR MATERIAL BREACH-

`(A) IN GENERAL- An additional tax in the amount determined under subparagraph (B) shall be imposed on any person on the earlier of--

`(i) the disposition by such person of any interest in property subject to an endangered species conservation agreement (other than a disposition described in subparagraph (C)),

`(ii) a material breach by such person of the endangered species conservation agreement, or

`(iii) the termination of the endangered species conservation agreement.

`(B) AMOUNT OF ADDITIONAL TAX-

`(i) IN GENERAL- The amount of the additional tax imposed by subparagraph (A) with respect to any interest shall be an amount equal to the applicable percentage of the lesser of--

`(I) the adjusted tax difference attributable to such interest (within the meaning of section 2032A(c)(2)(B)), or

`(II) the excess of the amount realized with respect to the interest (or, in any case other than a sale or

exchange at arm's length, the fair market value of the interest) over the value of the interest determined under subsection (a).

`(ii) APPLICABLE PERCENTAGE- For purposes of clause (i), the applicable percentage is determined in accordance with the following table:

The applicable percentage is--

100

75

50

25

0.

`(C) EXCEPTION IF CERTAIN HEIRS ASSUME OBLIGATIONS UPON THE DEATH OF A PERSON EXECUTING THE AGREEMENT- Subparagraph (A)(i) shall not apply if--

`(i) upon the death of a person described in subsection (b)(1)(B) during the term of such agreement, the property subject to such agreement passes to a member of the person's family, and

`(ii) the member agrees--

`(I) to assume the obligations imposed on such person under the endangered species conservation agreement,

`(II) to assume personal liability for any tax imposed under subparagraph (A) with respect to any future event described in subparagraph (A), and

`(III) to notify the Secretary of the Treasury and the Secretary of the Interior or the Secretary of Commerce that the member has assumed such obligations and liability.

If a member of the person's family enters into an agreement described in subclauses (I), (II), and (III), such member shall be treated as signatory to the endangered species conservation agreement the person entered into.

`(2) DUE DATE OF ADDITIONAL TAX- The additional tax imposed by paragraph (1) shall become due and payable on the day that is 6 months after the date of the disposition referred to in paragraph (1)(A)(i) or, in the case of an event described in clause (ii) or (iii) of paragraph (1)(A), on April 15 of the calendar year following any year in which the Secretary of the Interior or the Secretary of Commerce fails to provide the certification required under subsection (c)(3).

`(e) STATUTE OF LIMITATIONS- If a taxpayer incurs a tax liability pursuant to subsection (d)(1)(A), then--

`(1) the statutory period for the assessment of any additional tax imposed by subsection (d)(1)(A) shall not expire before the expiration of 3 years from the date the Secretary is notified (in such manner as the Secretary may by regulation prescribe) of the incurring of such tax liability, and

`(2) such additional tax may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law that would otherwise prevent such assessment.

`(f) ELECTION AND FILING OF AGREEMENT- The election under this section shall be made on the return of the tax imposed by section 2001. Such election, and the filing under subsection (b) of an endangered species conservation agreement, shall be made in such manner as the Secretary shall by regulation provide.

`(g) APPLICATION OF THIS SECTION TO INTERESTS IN PARTNERSHIPS, CORPORATIONS, AND TRUSTS- This section shall apply to an interest in a partnership, corporation, or trust if at least 30 percent of the entity is owned (directly or indirectly) by the decedent, as determined under the rules described in section 2057(e)(3).

`(h) MEMBER OF FAMILY- For purposes of this section, the term `member of the family' means any member of the family (as defined in section 2032A(e)(2)) of the decedent.'

(b) CARRYOVER BASIS- Section 1014(a)(4) of the Internal Revenue Code of 1986 (relating to basis of property acquired from a decedent) is amended by inserting `or 2058' after `section 2031(c)'.

(c) CLERICAL AMENDMENT- The table of sections for part IV of subchapter A of chapter 11 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:

`Sec. 2058. Certain real property subject to endangered species conservation agreement.'

(d) EFFECTIVE DATE- The amendments made by this section shall apply to estates of decedents dying after the date of the enactment of this Act.

SEC. 5. EXPANSION OF ESTATE TAX EXCLUSION FOR REAL PROPERTY SUBJECT TO QUALIFIED CONSERVATION EASEMENT.

(a) REPEAL OF CERTAIN RESTRICTIONS ON WHERE LAND IS LOCATED- Clause (i) of section 2031(c)(8)(A) (defining land subject to a qualified conservation easement) is amended to read as follows:

`(i) which is located in the United States or any possession of the United States,'.

(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.

END