Text: S.2223 — 110th Congress (2007-2008)All Information (Except Text)

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Placed on Calendar Senate (10/24/2007)

Calendar No. 442

110th CONGRESS
1st Session
S. 2223

[Report No. 110–205]


To amend the Internal Revenue Code of 1986 to provide additional tax incentives to promote habitat conservation and restoration, and for other purposes.


IN THE SENATE OF THE UNITED STATES

October 24, 2007

Mr. Baucus, from the Committee on Finance, reported the following original bill; which was read twice and placed on the calendar


A BILL

To amend the Internal Revenue Code of 1986 to provide additional tax incentives to promote habitat conservation and restoration, and for other purposes.

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

SECTION 1. Short title, etc.

(a) Short title.—This Act may be cited as the “Habitat and Land Conservation Act of 2007”.

(b) Amendment of 1986 Code.—Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

(c) Table of contents.—The table of contents for this Act is as follows:


Sec. 1. Short title, etc.

Sec. 2. Permanent extension of special rule encouraging contributions of capital gain real property for conservation purposes.

Sec. 3. Tax credit for recovery and restoration of endangered species.

Sec. 4. Deduction for endangered species recovery expenditures.

Sec. 5. Exclusion for certain payments and programs relating to fish and wildlife.

Sec. 6. Extension of expensing of brownfields remediation costs.

Sec. 7. Allowance of section 1031 treatment for exchanges involving certain mutual ditch, reservoir, or irrigation company stock.

Sec. 8. Modification of effective date of leasing provisions of the American Jobs Creation Act of 2004.

SEC. 2. Permanent extension of special rule encouraging contributions of capital gain real property for conservation purposes.

(a) In general.—

(1) INDIVIDUALS.—Subparagraph (E) of section 170(b)(1) (relating to contributions of qualified conservation contributions) is amended by striking clause (vi).

(2) CORPORATIONS.—Subparagraph (B) of section 170(b)(2) (relating to qualified conservation contributions by certain corporate farmers and ranchers) is amended by striking clause (iii).

(b) Effective date.—The amendments made by this section shall apply to contributions made in taxable years beginning after December 31, 2007.

SEC. 3. Tax credit for recovery and restoration of endangered species.

(a) In general.—Subpart B of part IV of subchapter A of chapter 1 is amended by adding at the end the following new section:

“SEC. 30D. Endangered species recovery and restoration credit.

“(a) In general.—In the case of an eligible taxpayer, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of—

“(1) the habitat protection easement credit, plus

“(2) the habitat restoration credit.

“(b) Limitation.—

“(1) IN GENERAL.—The credit allowed under subsection (a) for any taxpayer for any taxable year shall not exceed the endangered species recovery credit limitation allocated to the eligible taxpayer under subsection (f) for the calendar year in which the taxpayer's taxable year ends.

“(2) CARRYFORWARDS.—

“(A) IN GENERAL.—If the amount of the credit allowable under subsection (a) for any taxpayer for any taxable year (determined without regard to paragraph (1)) exceeds the endangered species recovery credit limitation allocated under subsection (f) to such taxpayer for the calendar year in which the taxpayer's taxable year ends, such excess may be carried forward to the next taxable year for which an allocation is made to such taxpayer under subsection (f). Any amount carried to another taxable year under this subparagraph shall be treated as added to the credit allowable under subsection (a)(1) or (a)(2), whichever is appropriate, for such taxable year.

“(B) CARRYFORWARD OF ALLOCATION AMOUNT.—If the amount of the endangered species recovery credit limitation allocated to a taxpayer for any calendar year under subsection (f) exceeds the amount of the credit allowed to the taxpayer under subsection (a) for the taxable year ending in such calendar year, such excess may be carried forward to the next taxable year of the taxpayer. Any amount carried to another taxable year under this subparagraph shall be treated as allocated to the taxpayer for use in such taxable year under subsection (f).

“(c) Eligible taxpayer; qualified agreements.—For purposes of this section—

“(1) IN GENERAL.—The term ‘eligible taxpayer’ means—

“(A) a taxpayer who—

“(i) owns real property which contains the habitat of a qualified species, and

“(ii) enters into a qualified perpetual habitat protection agreement, a qualified 30-year habitat protection agreement, or a qualified habitat protection agreement with respect to such real property, and

“(B) any other taxpayer who—

“(i) is a party to a qualified perpetual habitat protection agreement, a qualified 30-year habitat protection agreement, or a qualified habitat protection agreement, and

“(ii) as part of any such agreement, agrees to assume responsibility for costs paid or incurred as a result of implementing such agreement.

“(2) QUALIFIED PERPETUAL HABITAT PROTECTION AGREEMENT.—The term ‘qualified perpetual habitat protection agreement’ means an agreement—

“(A) under which a taxpayer described in paragraph (1)(A) grants to the appropriate Secretary, the Secretary of Agriculture, the Secretary of Defense, or a State an easement in perpetuity for the protection of the habitat of a qualified species, and

“(B) which meets the requirements of paragraph (5).

“(3) QUALIFIED 30-YEAR HABITAT PROTECTION AGREEMENT.—The term ‘qualified 30-year habitat protection agreement’ means an agreement not described in paragraph (2)—

“(A) under which a taxpayer described in paragraph (1)(A) grants to the appropriate Secretary, the Secretary of Agriculture, the Secretary of Defense, or a State an easement for a period of 30 years or greater for the protection of the habitat of a qualified species, and

“(B) which meets the requirements of paragraph (5).

“(4) QUALIFIED HABITAT PROTECTION AGREEMENT.—The term ‘qualified habitat protection agreement’ means an agreement—

“(A) under which a taxpayer described in paragraph (1)(A) enters into an agreement not described in paragraph (2) or (3) with the appropriate Secretary, the Secretary of Agriculture, the Secretary of Defense, or a State to protect the habitat of a qualified species for a specified period of time, and

“(B) which meets the requirements of paragraph (5).

“(5) REQUIREMENTS.—An agreement meets the requirements of this paragraph if the agreement—

“(A) is consistent with any recovery plan which is applicable and which has been approved for a qualified species under section 4 of the Endangered Species Act of 1973,

“(B) includes a habitat management plan agreed to by the appropriate Secretary and the eligible taxpayer, and

“(C) requires that technical assistance with respect to the duties under the habitat management plan be provided to the taxpayer by the appropriate Secretary or an entity approved by the appropriate Secretary.

“(d) Habitat protection easement credit.—

“(1) IN GENERAL.—For purposes of subsection (a)(1), the habitat protection easement credit for any taxable year is an amount equal to—

“(A) in the case of a taxpayer described in subsection (c)(1)(A) who has entered into a qualified perpetual habitat protection agreement during such taxable year, 100 percent of the excess (if any) of—

“(i) the fair market value of the real property with respect to which the qualified perpetual habitat protection agreement is made, determined on the day before such agreement is entered into, over

“(ii) the fair market value of such property, determined on the day after such agreement is entered into,

“(B) in the case of a taxpayer described in subsection (c)(1)(A) who has entered into a qualified 30-year habitat protection agreement during such taxable year, 75 percent of such excess, and

“(C) in the case of any other taxpayer, zero.

“(2) REDUCTION FOR AMOUNT RECEIVED FOR EASEMENT.—The amount determined under paragraph (1) shall be reduced by any amount received by the taxpayer in connection with the easement.

“(3) LIMITATION BASED ON AMOUNT OF TAX.—The credit allowed under subsection (a)(1) for any taxable year shall not exceed the sum of—

“(A) the taxpayer's regular tax liability for the taxable year reduced by the sum of the credits allowable under subpart A and sections 27, 30, 30B, and 30C, and

“(B) the tax imposed by section 55(a) for the taxable year.

“(4) CARRYFORWARD OF UNUSED CREDIT.—If the credit allowable under subsection (a)(1) for any taxable year exceeds the limitation imposed by paragraph (3) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a)(1) for such succeeding taxable year.

“(5) QUALIFIED APPRAISALS REQUIRED.—No amount shall be taken into account under this subsection unless the eligible taxpayer includes with the taxpayer's return for the taxable year a qualified appraisal (within the meaning of section 170(f)(11)(E)) of the real property.

“(e) Habitat restoration credit.—

“(1) IN GENERAL.—For purposes of subsection (a)(2), the habitat restoration credit for any taxable year shall be an amount equal to—

“(A) in the case of a qualified perpetual habitat protection agreement, 100 percent of the costs paid or incurred by an eligible taxpayer during such taxable year pursuant to the habitat management plan under such agreement,

“(B) in the case of a qualified 30-year habitat protection agreement, 75 percent of the costs paid or incurred by an eligible taxpayer during such taxable year pursuant to the habitat management plan under such agreement, and

“(C) in the case of a qualified habitat protection agreement, 50 percent of the costs paid or incurred by an eligible taxpayer during such taxable year pursuant to the habitat management plan under such agreement.

“(2) LIMITATION BASED ON AMOUNT OF TAX.—The credit allowed under subsection (a)(2) for any taxable year shall not exceed the excess (if any) of—

“(A) the regular tax liability for the taxable year reduced by the sum of the credits allowable under subpart A, sections 27, 30, 30B, and 30C, and subsection (a)(1), over

“(B) the tentative minimum tax for the taxable year.

“(3) CARRYFORWARD OF UNUSED CREDIT.—If the credit allowable under subsection (a)(2) for any taxable year exceeds the limitation imposed by paragraph (2) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a)(2) for such succeeding taxable year.

“(4) SPECIAL RULES.—

“(A) CERTAIN COSTS NOT INCLUDED.—No amount shall be taken into account with respect to any cost which is paid or incurred by a taxpayer to comply with any requirement of a Federal, State, or local government (other than costs required under an agreement described in subsection (c)).

“(B) SUBSIDIZED FINANCING.—For purposes of paragraph (1), the amount of costs paid or incurred by an eligible taxpayer pursuant to any habitat management plan described in subsection (c)(5)(B) shall be reduced by the amount of any financing provided under any Federal or State program a principal purpose of which is to subsidize financing for the conservation of the habitat of a qualified species.

“(f) Endangered species recovery credit limitation.—

“(1) IN GENERAL.—There is an endangered species recovery credit limitation for each calendar year. Such limitation is —

“(A) for 2008, 2009, 2010, 2011, and 2012—

“(i) $290,000,000 with respect to qualified perpetual habitat protection agreements,

“(ii) $55,000,000 with respect to qualified 30-year habitat protection agreements, and

“(iii) $35,000,000 with respect to qualified habitat protection agreements, and

“(B) except as provided in paragraph (3), zero thereafter.

“(2) ALLOCATION OF LIMITATION.—

“(A) IN GENERAL.—The Secretary, in consultation with the Secretary of the Interior and the Secretary of Commerce, shall allocate the endangered species recovery credit limitation to eligible taxpayers.

“(B) ESTABLISHMENT OF ALLOCATION PROGRAM.—Not later than 180 days after the date of the enactment of this Act, the Secretary, in consultation with the Secretary of the Interior and the Secretary of Commerce, shall, by regulation, establish a program to process applications from eligible taxpayers and to determine how to best allocate the credit limitation under subparagraph (A), taking into account the considerations described in subparagraph (C).

“(C) CONSIDERATIONS.—In accepting applications to make allocations to eligible taxpayers under this section, priority shall be given to taxpayers with agreements—

“(i) relating to habitats that will significantly increase the likelihood of recovering and delisting a species as an endangered species or a threatened species (as defined under section 2 of the Endangered Species Act of 1973),

“(ii) that are cost-effective and maximize the benefits to a qualified species per dollar expended,

“(iii) relating to habitats of species which have a federally approved recovery plan pursuant to section 4 of the Endangered Species Act of 1973,

“(iv) relating to habitats with the potential to contribute significantly to the improvement of the status of a qualified species,

“(v) relating to habitats with the potential to contribute significantly to the eradication or control of invasive species that are imperiling a qualified species,

“(vi) with habitat management plans that will manage multiple qualified species,

“(vii) with habitat management plans that will create adjacent or proximate habitat for the recovery of a qualified species,

“(viii) relating to habitats for qualified species with an urgent need for protection,

“(ix) with habitat management plans that assist in preventing the listing of a species as endangered or threatened under the Endangered Species Act of 1973 or a similar State law,

“(x) with habitat management plans that may resolve conflicts between the protection of qualified species and otherwise lawful human activities, and

“(xi) with habitat management plans that may resolve conflicts between the protection of a qualified species and military training or other military operations.

“(3) CARRYOVER OF UNUSED LIMITATION.—If for any calendar year any of the limitations under paragraph (1) (after the application of this paragraph) exceeds the amount allocated to eligible taxpayers for such calendar year, such limitation amount for the following calendar year shall be increased by the amount of such excess.

“(g) Other definitions and special rules.—

“(1) APPROPRIATE SECRETARY.—The term ‘appropriate Secretary’ has the meaning given to the term ‘Secretary’ under section 3(15) of the Endangered Species Act of 1973.

“(2) HABITAT MANAGEMENT PLAN.—The term ‘habitat management plan’ means, with respect to any habitat, a plan which—

“(A) identifies one or more qualified species to which the plan applies,

“(B) is designed to—

“(i) restore or enhance the habitat of the qualified species, or

“(ii) reduce threats to the qualified species through the management of the habitat,

“(C) describes the current condition of the habitat to be restored or enhanced,

“(D) describes the threats to the qualified species that are intended to be reduced through the plan,

“(E) describes the management practices to be undertaken by the taxpayer,

“(F) provides a schedule of deadlines for undertaking such management practices and the expected responses of the habitat and the species,

“(G) requires monitoring of the management practices and the status of the qualified species and its habitat, and

“(H) describes the technical assistance to be provided to the taxpayer and identifies the entity that will provide such assistance.

“(3) QUALIFIED SPECIES.—The term ‘qualified species’ means—

“(A) any species listed as an endangered species or threatened species under the Endangered Species Act of 1973, or

“(B) any species for which a finding has been made under section 4(b)(3) of the Endangered Species Act of 1973 that listing under such Act may be warranted.

“(4) TAKING.—The term ‘taking’ has the meaning given to such term under the Endangered Species Act of 1973.

“(5) REDUCTION IN BASIS.—For purposes of this subtitle, the basis of any property for which a credit is allowed under subsection (a)(1) shall be reduced by the amount of the credit so allowed.

“(6) DENIAL OF DOUBLE BENEFIT.—No deduction or other credit shall be allowed under this chapter for any amount with respect to which a credit is allowed under subsection (a).

“(7) CERTIFICATION.—No credit shall be allowed under subsection (a) unless the appropriate Secretary certifies that any agreement described in subsection (c) will contribute to the recovery of a qualified species.

“(8) REQUEST FOR AUTHORIZATION OF INCIDENTAL TAKINGS.—The Secretary shall request the appropriate Secretary to consider whether to authorize under the Endangered Species Act of 1973 takings by an eligible taxpayer of a qualified species to which an agreement described in subsection (c) relates if the takings are incidental to—

“(A) the restoration, enhancement, or management of the habitat pursuant to the habitat management plan under the agreement, or

“(B) the use of the property to which the agreement pertains at any time after the expiration of the easement or the specified period described in subsection (c)(4)(A), but only if such use will leave the qualified species at least as well off on the property as it was before the agreement was made.

“(9) RECAPTURE.—The Secretary shall, by regulations, provide for recapturing the benefit under any credit allowable under subsection (a) if the Secretary determines that—

“(A) the taxpayer has failed to carry out the duties of the taxpayer under the terms of a qualified perpetual habitat protection agreement, a qualified 30-year habitat protection agreement, or a qualified habitat protection agreement, and

“(B) there are no other available means to remediate such failure.”.

(b) GAO Study.—

(1) IN GENERAL.—The Comptroller General of the United States shall undertake a study on the effectiveness of the credit allowed under section 30D of the Internal Revenue Code of 1986 (as added by this Act).

(2) ISSUES TO BE STUDIED.—The study under paragraph (1) shall—

(A) evaluate—

(i) the contributions that habitat management plans established under such credit have made in restoring or enhancing species habitat and reducing threats to species, and

(ii) the implementation of the credit allocation program established in section 30D(f)(2) of such Code (as so added), and

(B) include recommendations for improving the effectiveness of such credit.

(3) REPORTS.—

(A) INTERIM REPORT.—Not later than 3 years after the date of the enactment of this Act, the Comptroller General of the United States shall submit to Congress an interim report on the study conducted under paragraph (1).

(B) FINAL REPORT.—Not later than 5 years after the date of the enactment of this Act, the Comptroller General of the United States shall submit to Congress a final report on the study conducted under paragraph (1).

(c) Conforming amendments.—

(1) Section 1016(a) is amended by striking “and” at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting “, and”, and by inserting after paragraph (37) the following new paragraph:

“(38) to the extent provided in section 30D(g)(5).”.

(2) The table of sections for subpart B of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 30C the following new item:


“Sec. 30D. Endangered species recovery and restoration credit.”.

(d) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2007.

SEC. 4. Deduction for endangered species recovery expenditures.

(a) Deduction for endangered species recovery expenditures.—

(1) IN GENERAL.—Paragraph (1) of section 175(c) (relating to definitions) is amended by inserting after the first sentence the following new sentence: “Such term shall include expenditures paid or incurred for the purpose of achieving site-specific management actions recommended in recovery plans approved pursuant to the Endangered Species Act of 1973.”.

(2) CONFORMING AMENDMENTS.—

(A) Section 175 is amended by inserting “, or for endangered species recovery” after “prevention of erosion of land used in farming” each place it appears in subsections (a) and (c).

(B) The heading of section 175 is amended by inserting “; endangered species recovery expenditures” before the period.

(C) The item relating to section 175 in the table of sections for part VI of subchapter B of chapter 1 is amended by inserting “; endangered species recovery expenditures” before the period.

(b) Limitations.—Paragraph (3) of section 175(c) (relating to additional limitations) is amended—

(1) in the heading, by inserting “or endangered species recovery plan” after “conservation plan”, and

(2) in subparagraph (A)(i), by inserting “or the recovery plan approved pursuant to the Endangered Species Act of 1973” after “Department of Agriculture”.

(c) Effective date.—The amendments made by this section shall apply to expenditures paid or incurred after the date of the enactment of this Act.

SEC. 5. Exclusion for certain payments and programs relating to fish and wildlife.

(a) In general.—Subsection (a) of section 126 (relating to certain cost-sharing payments) is amended by redesignating paragraph (10) as paragraph (12) and by inserting after paragraph (9) the following new paragraphs:

“(10) The Partners for Fish and Wildlife Program authorized by the Partners for Fish and Wildlife Act.

“(11) The Landowner Incentive Program, the State Wildlife Grants Program, and the Private Stewardship Grants Program authorized by the Fish and Wildlife Act of 1956.”.

(b) Effective date.—The amendments made by this section shall apply to payments received after the date of the enactment of this Act.

SEC. 6. Extension of expensing of brownfields remediation costs.

(a) Extension.—Subsection (h) of section 198 is amended by striking “2007” and inserting “2010”.

(b) Effective date.—The amendment made by this section shall apply to expenditures paid or incurred after December 31, 2007.

SEC. 7. Allowance of section 1031 treatment for exchanges involving certain mutual ditch, reservoir, or irrigation company stock.

(a) In general.—Section 1031 (relating to exchange of property held for productive use or investment) is amended by adding at the end the following new subsection:

“(i) Special rules for mutual ditch, reservoir, or irrigation company stock.—For purposes of subsection (a)(2)(B), the term ‘stocks’ shall not include shares in a mutual ditch, reservoir, or irrigation company if at the time of the exchange—

“(1) the mutual ditch, reservoir, or irrigation company is an organization described in section 501(c)(12)(A) (determined without regard to the percentage of its income that is collected from its members for the purpose of meeting losses and expenses), and

“(2) the shares in such company have been recognized by the highest court of the State in which such company was organized or by applicable State statute as constituting or representing real property or an interest in real property.”.

(b) Effective date.—The amendment made by this section shall apply to transfers after the date of the enactment of this Act.

SEC. 8. Modification of effective date of leasing provisions of the American Jobs Creation Act of 2004.

(a) Leases to Foreign Entities.—Section 849(b) of the American Jobs Creation Act of 2004 is amended by adding at the end the following new paragraph:

“(5) LEASES TO FOREIGN ENTITIES.—In the case of tax-exempt use property leased to a tax-exempt entity which is a foreign person or entity, the amendments made by this part shall apply to taxable years beginning after December 31, 2006, with respect to leases entered into on or before March 12, 2004.”.

(b) Effective Date.—The amendment made by this section shall take effect as if included in the enactment of the American Jobs Creation Act of 2004.


Calendar No. 442

110th CONGRESS
     1st Session
S. 2223
[Report No. 110–205]

A BILL
To amend the Internal Revenue Code of 1986 to provide additional tax incentives to promote habitat conservation and restoration, and for other purposes.

October 24, 2007
Read twice and placed on the calendar