To amend the Internal Revenue Code of 1986 to exempt certain farmland from the estate tax.

Amends the Internal Revenue Code to exclude from the gross estate of a decedent the value of farmland used by an heir of the decedent for farming purposes. Imposes a recapture tax on an heir who disposes of such farmland after the decedent's death or who ceases to use it for farming purposes.

[Congressional Bills 111th Congress]
[From the U.S. Government Printing Office]
[H.R. 173 Introduced in House (IH)]







111th CONGRESS
  1st Session
                                H. R. 173

 To amend the Internal Revenue Code of 1986 to exempt certain farmland 
                          from the estate tax.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 6, 2009

  Mr. Salazar (for himself and Ms. Markey of Colorado) introduced the 
 following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to exempt certain farmland 
                          from the estate tax.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. EXCLUSION FROM GROSS ESTATE OF CERTAIN FARMLAND SO LONG AS 
              FARMLAND USE CONTINUES.

    (a) In General.--Part III of subchapter A of chapter 11 of the 
Internal Revenue Code of 1986 (relating to gross estate) is amended by 
inserting after section 2033 the following new section:

``SEC. 2033A. EXCLUSION OF CERTAIN FARMLAND SO LONG AS USE AS FARMLAND 
              CONTINUES.

    ``(a) In General.--In the case of an estate of a decedent to which 
this section applies, the value of the gross estate shall not include 
the adjusted value of qualified farmland included in the estate.
    ``(b) Estates to Which Section Applies.--This section shall apply 
to an estate if--
            ``(1) the decedent was (at the date of the decedent's 
        death) a citizen or resident of the United States,
            ``(2) with respect to each of 3 or more of the 5 
        consecutive taxable years ending with the decedent's last 
        taxable year, the decedent's gross income from the trade or 
        business of farming exceeds 50 percent of the decedent's gross 
        income, and
            ``(3) during the 8-year period ending on the date of the 
        decedent's death there have been periods aggregating 5 years or 
        more during which--
                    ``(A) the qualified farmland was owned by the 
                decedent or a member of the decedent's family, and
                    ``(B) there was material participation (within the 
                meaning of section 2032A(e)(6)) by the decedent or a 
                member of the decedent's family in the operation of 
                such farmland.
        Rules similar to the rules of paragraphs (4) and (5) of section 
        2032A(b) shall apply for purposes of subparagraph (B).
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified farmland.--The term `qualified farmland' 
        means any real property--
                    ``(A) which is located in the United States,
                    ``(B) which is used as a farm for farming purposes 
                (within the meaning of section 2032A(e)), and
                    ``(C) which was acquired from or passed from the 
                decedent to a qualified heir of the decedent and which, 
                on the date of the decedent's death, was being so used 
                by the decedent or a member of the decedent's family.
            ``(2) Adjusted value.--The term `adjusted value' means the 
        value of farmland for purposes of this chapter (determined 
        without regard to this section), reduced by the amount 
        deductible under paragraph (3) or (4) of section 2053(a).
            ``(3) Other terms.--Any other term used in this section 
        which is also used in section 2032A shall have the same meaning 
        given such term by section 2032A.
    ``(d) Tax Treatment of Dispositions and Failures To Use for Farming 
Purposes.--
            ``(1) Imposition of recapture tax.--If, at any time after 
        the decedent's death and before the death of the qualified 
        heir--
                    ``(A) the qualified heir disposes of any interest 
                in qualified farmland (other than by a disposition to a 
                member of his family), or
                    ``(B) the qualified heir ceases to use the real 
                property which was acquired (or passed) from the 
                decedent as a farm for farming purposes, then, there is 
                hereby imposed a recapture tax.
            ``(2) Amount of recapture tax, etc.--Rules similar to the 
        rules of section 2032A(c) with respect to the additional estate 
        tax shall apply for purposes of this subsection with respect to 
        the recapture tax.
    ``(e) Application of Other Rules.--Rules similar to the rules of 
subsections (e), (f), (g), (h), and (i) of section 2032A shall apply 
for purposes of this section.''
    (b) Clerical Amendment.--The table of sections for part III of 
subchapter A of chapter 11 of such Code is amended by inserting after 
the item relating to section 2033 the following new item:

``Sec. 2033A. Exclusion of certain farmland so long as use as farmland 
                            continues.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying after the date of the enactment of 
this Act.
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