H.R. 173 (111th): To amend the Internal Revenue Code of 1986 to exempt certain farmland from the estate tax.

111th Congress, 2009–2010. Text as of Jan 06, 2009 (Introduced).

Status & Summary | PDF | Source: GPO

I

111th CONGRESS

1st Session

H. R. 173

IN THE HOUSE OF REPRESENTATIVES

January 6, 2009

(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.

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:

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.