IN THE SENATE OF THE UNITED STATES
March 20, 2012
Mr. Burr (for himself, Mrs. Hagan, Mr. Wicker, and Mr. Cochran) 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 that the value of certain historic property shall be determined using an income approach in determining the taxable estate of a decedent.
Estate tax valuation of certain historic property
Part III of subchapter A of chapter 11 of the Internal Revenue Code of 1986 is amended by inserting after section 2032A the following new section:
Valuation of certain historic property
Value based on net earnings of historic property
the decedent was (at the time of his death) a citizen or resident of the United States, and
the executor executes an agreement which meets the requirements of subsection (c),
Definitions and special rules
For purposes of this section—
Qualified historic property
The term qualified historic property means—
any building (and its structural components)—
which is designated as a National Historic Landmark under section 101 of the National Historic Preservation Act at the time of the decedent's death and for a continuous period of at least 25 years prior to the decedent's death, and
which was originally used for residential or farming purposes,
any other real property to the extent reasonably necessary for ingress, egress, public enjoyment, and visitation of the property described in subparagraph (A) (but not including any real property used primarily for the sale, production, or manufacturing of products or for lodging purposes), and
personal property included within, or associated with, property described in subparagraph (A) or (B) if such personal property—
is held by the decedent holding such building,
has been so included within, or associated with, such property so described throughout the 25-year period ending on the date of the decedent’s death, and
is covered by the agreement referred to in subsection (a)(2) which covers such building,
Treatment of historic property held by a corporation
In the case of a corporation all of the stock in which was held on the date of the decedent’s death by the decedent or members of the decedent’s family (as defined in section 2032A(e)(2))—
stock in such corporation shall be treated for purposes of this section as qualified historic property to the extent that the value of such stock is attributable to qualified historic property held by such corporation, but
the requirements of subsection (c) shall be met only if each member of the decedent’s family holding such stock on such date signs the agreement referred to in subsection (a)(2).
The term net earnings means income derived from qualified historic property (determined without regard to any interest, depreciation, or tax expense) times 7.
Determination of time periods
In determining the period for which the decedent has held any property or stock, there shall be included the period for which such property or stock was held by members of the decedent's family (as defined in section 2032A(e)(2)).
Requirements for agreement
For purposes of subsection (a)(2), an agreement meets the requirements of this subsection if—
such agreement is a written agreement signed by each person in being who has an interest (whether or not in possession) in the building described in subsection (b)(1)(A),
such agreement provides that the only activities carried on at such building are activities which are substantially related (aside from the need for income or funds or the use made of the profits derived) to—
the public visitation of such building and the property described in subsection (b)(1)(B) with respect to such property, and
the maintenance and preservation of such building and property for such public visitation, and
such agreement provides that such building will be open to the public for a period of at least 25 years beginning on the date on which the return of the tax imposed by this chapter is filed.
Open to the public
For the purposes of paragraph (1)(C)—
a property shall be treated as being open to the public for any year if—
a substantial portion of the property is open for public visitation for at least 8 hours per day and 6 days per week during at least any 40 weeks of such year,
the executor notifies the State historic agency that the property is open and available for public visitation,
public access to the property is achievable without undue and deliberate difficulty or cost purposely intended to discourage the visitation of the property,
1 or more of the signatories to the agreement or professional or trained volunteer staff representing such signatories are available to facilitate the visitation of the property through at least 2 methods and practices common to the tourism industry, including telephone, website, mailing address, or ticket booth, and
there is an ongoing effort to ensure the general public is aware that the property is available for visitation, and
the 25-year period referred to in such paragraph shall be suspended during reasonable periods of renovation.
Tax treatment of dispositions and failure To comply with agreement
Imposition of additional estate tax
If, during the 25-year period referred to in subsection (c)(1)(C)—
any person signing the written agreement referred to in subsection (a)(2) disposes of any interest in the building subject to such agreement, or
there is a violation of any provision of such agreement (as determined under regulations prescribed by the Secretary),
Exception for certain transferees who agree to be bound by agreement
No tax shall be imposed under paragraph (1) by reason of any disposition if the person acquiring such interest—
is a qualified organization (as defined in section 170(b)(1)(A)) or is a member of the family (as defined in section 2032A(e)(2)) of the person disposing of such interest, and
agrees to be bound by the agreement referred to in subsection (a)(2) and to be liable for any tax under this subsection in the same manner as the person disposing of such interest.
Amount of additional tax
The amount of the additional tax imposed by paragraph (1) with respect to any property shall be an amount equal to the excess of—
what would (but for subsection (a)) have been the tax imposed by section 2001 (reduced by the credits allowable), over
the tax imposed by section 2001 (as so reduced).
The additional tax imposed by this subsection shall be due and payable on the day which is 9 months after the date of the disposition or violation referred to in paragraph (1).
Liability for tax
Any person signing the agreement referred to in subsection (a)(2) (other than the executor) shall be personally liable for the additional tax imposed by this subsection. If more than 1 person is liable under this subsection, all such persons shall be jointly and severally liable.
Certain other rules to apply
Rules similar to the rules of sections 1016(c), 2013(f), and 2032A(f) shall apply for purposes of this subsection.
Coordination with gift tax
Section 2512 of the Internal Revenue Code of 1986 is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection:
For the purposes of this chapter, the value of qualified historic property (as defined in section 2032B(b)(1)) transferred for less than an adequate and full consideration shall be valued under section 2032B.
of section 2056A(b)(10) of the Internal Revenue Code of 1986 is amended by
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 2032A the following new item:
Sec. 2032B. Valuation of certain historic property.
The amendments made by this section shall apply with respect to the estates of decedents dying after the date of the enactment of this Act. Notwithstanding the preceding sentence, for the purposes of section 901 of the Economic Growth and Tax Reconciliation Act of 2001, the amendments made by this section shall be treated as being enacted before the date of the enactment of such Act.