text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``American Farm Protection Act of 
  1995''.
  
  SEC. 2. TREATMENT OF LAND SUBJECT TO A QUALIFIED CONSERVATION EASEMENT.
  
      (a) 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.--If the executor makes the election 
          described in paragraph (3), then, 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 (reduced by the amount of any indebtedness to which 
          such land is subject).
              ``(2) Treatment of Retained Development Right.--
                      ``(A) In general.--Paragraph (1) shall not apply to 
                  the value of any development right retained by the 
                  donor in the conveyance of a qualified conservation 
                  easement. The tax imposed by section 2001 (if any) 
                  attributable to any development right so retained shall 
                  be imposed only upon the disposition of such property. 
                  The tax so imposed shall be due and payable by the 
                  person so disposing of such property on the 15th day of 
                  the 4th month following the calendar year in which such 
                  disposition occurs.
                      ``(B) Definitions.--For purposes of this 
                  paragraph--
                              ``(i) Disposition.--The term `disposition' 
                          shall not include any gift or devise.
                              ``(ii) Development right.--The term 
                          `development right' means the right to 
                          establish or use any structure and the land 
                          immediately surrounding it for sale, rent, or 
                          any other commercial purpose which is not 
                          subordinate to and directly supportive of--
                                      ``(I) the conservation purpose 
                                  identified in the easement, or
                                      ``(II) the activity of farming, 
                                  forestry, ranching, horticulture, 
                                  viticulture, or recreation (whether or 
                                  not for profit) conducted on land 
                                  subject to the easement in which such 
                                  right is retained.
              ``(3) Election.--The election under this subsection shall 
          be made on the return of the tax imposed by section 2001. Such 
          an election, once made, shall be irrevocable.
              ``(4) Calculation and notice of potential estate tax due.--
          An executor making the election described in paragraph (3) 
          shall compute the amount of tax imposed by section 2001 upon 
          any development right (as defined in paragraph (2)) retained by 
          the donor in the conveyance of such qualified conservation 
          easement and include such computation with the return of the 
          tax imposed by section 2001. The executor shall also file a 
          `Notice of Potential Estate Tax Due' in the place or places 
          where deeds are put to public record for the locality in which 
          the land subject to such qualified conservation easement is 
          located. The report of the computation of tax on any retained 
          development right and the filing of the notice prescribed in 
          this paragraph shall be done in such manner and on such forms 
          as the Secretary shall prescribe.
              ``(5) Definitions.--For purposes of this subsection--
                      ``(A) Land subject to a qualified conservation 
                  easement.--The term `land subject to a qualified 
                  conservation easement' means land--
                              ``(i) which is located in or within 50 
                          miles of an area which, on the date of the 
                          decedent's death, is--
                                      ``(I) a metropolitan area (as 
                                  defined by the Office of Management and 
                                  Budget), or
                                      ``(II) a National Park (unless it 
                                  is determined by the Secretary that 
                                  land in or within 50 miles of such a 
                                  Park is not under significant 
                                  development pressure),
                              ``(ii) which 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, and
                              ``(iii) with respect to which a qualified 
                          conservation easement is or has been made by 
                          the decedent or a member of the decedent's 
                          family.
                      ``(B) Qualified conservation easement.--The term 
                  `qualified conservation easement' means a qualified 
                  conservation contribution (as defined in section 
                  170(h)(1)) of a qualified real property interest (as 
                  defined in section 170(h)(2)(C)). Clause (iv) of 
                  section 170(h)(4)(A) shall not apply for purposes of 
                  the preceding sentence.
                      ``(C) Member of family.--The term `member of the 
                  decedent's family' means any member of the family (as 
                  defined in section 2032A(e)(2)) of the decedent.''
      (b) Carryover Basis.--Section 1014(a) of such Code (relating to 
  basis of property acquired from a decedent) is amended by striking the 
  period at the end of paragraph (3) and inserting ``, or'' and by adding 
  after paragraph (3) the following new paragraph:
              ``(4) to the extent of the applicability of the exclusion 
          described in section 2031(c), the basis in the hands of the 
          decedent.''
      (c) Effective Date.--The amendments made by this section shall 
  apply to estates of decedents dying after December 31, 1994.
  
  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 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 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' has the meaning given to such term by section 2031(c); except 
  that references to the decedent shall be treated as references to the 
  donor and references to the date of the decedent's death shall be 
  treated as references to the date of the transfer by the donor.''
      (b) Effective Date.--The amendment made by this section shall apply 
  to gifts made after December 31, 1994.
  
  SEC. 4. QUALIFIED CONSERVATION CONTRIBUTION IS NOT A DISPOSITION.
  
      (a) Qualified Conservation Contribution Is Not a Disposition.--
  Subsection (c) of section 2032A of the Internal Revenue Code of 1986 
  (relating to alternative valuation method) is amended by adding at the 
  end the following new paragraphs:
              ``(8) Qualified conservation contribution is not a 
          disposition.--A qualified conservation contribution (as defined 
          in section 170(h)) by gift or otherwise shall not be deemed a 
          disposition under subsection (c)(1)(A).
              ``(9) Exception for real property is land subject to a 
          qualified conservation easement.--If qualified real property is 
          land subject to a qualified conservation easement (as defined 
          in section 2031(c)), the preceding paragraphs of this 
          subsection shall not apply.''
      (b) Land Subject to a Qualified Conservation Easement Is Not 
  Disqualified.--Subsection (b) of section 2032A of such Code (relating 
  to alternative valuation method) is amended by adding at the end the 
  following paragraph:
                      ``(E) If property is otherwise qualified real 
                  property, the fact that it is land subject to a 
                  qualified conservation easement (as defined in section 
                  2031(c)) shall not disqualify it under this section.''
      (c) Effective Date.--The amendments made by this section shall 
  apply with respect to contributions made, and easements granted, after 
  December 31, 1994.
target: American Farm Protection Act of 1995 - Amends the Internal Revenue Code to exclude from the gross estate tax the value of land subject to a qualified conservation easement (less the amount of any indebtedness secured by such land).  Includes in the gross estate tax the value of each development right retained by the donor in the conveyance of the easement.  Makes such tax due upon the disposition of the property. Provides that such land subject to the exclusion will have a carryover basis for purposes of determining gain or loss. 
  Excludes from the gift tax transfers by gift of land subject to a conservation easement. 
  Declares that for purposes of the alternative estate valuation method:  (1) a qualified conservation contribution is not a disposition; and (2) land subject to a conservation easement is not disqualified.
feat_title: American Farm Protection Act of 1995