article: 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.
summary: 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.