1.Estate tax valuation of
certain historic property
(a)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:
2032B.Valuation of
certain historic property
(a)Value based on
net earnings of historic propertyIf—
(1)the decedent was
(at the time of his death) a citizen or resident of the United States,
and
(2)the executor
executes an agreement which meets the requirements of subsection (c),
then, for
the purposes of this chapter, the value of qualified historic property shall be
based on the net earnings (as defined in subsection (b)(3)) derived from such
property.(b)Definitions and
special rulesFor purposes of this section—
(1)Qualified
historic propertyThe term qualified historic
property means—
(A)any building (and
its structural components)—
(i)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
(ii)which was
originally used for residential or farming purposes,
(B)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
(C)personal property
included within, or associated with, property described in subparagraph (A) or
(B) if such personal property—
(i)is
held by the decedent holding such building,
(ii)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
(iii)is covered by
the agreement referred to in subsection (a)(2) which covers such
building,
owned by
the decedent throughout the 25-year period ending on the date of the decedent’s
death.(2)Treatment of
historic property held by a corporationIn 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))—
(A)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
(B)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).
(3)The term net earnings means income derived
from qualified historic property (determined without regard to any interest,
depreciation, or tax expense) times 7.
(4)Determination of
time periodsIn 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)).
(c)Requirements for
agreement
(1)For purposes of subsection (a)(2), an agreement meets the
requirements of this subsection if—
(A)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),
(B)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—
(i)the public
visitation of such building and the property described in subsection (b)(1)(B)
with respect to such property, and
(ii)the maintenance
and preservation of such building and property for such public visitation,
and
(C)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.
(2)For the purposes of paragraph (1)(C)—
(A)a property shall
be treated as being open to the public for any year if—
(i)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,
(ii)the executor
notifies the State historic agency that the property is open and available for
public visitation,
(iii)public access to
the property is achievable without undue and deliberate difficulty or cost
purposely intended to discourage the visitation of the property,
(iv)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
(v)there is an
ongoing effort to ensure the general public is aware that the property is
available for visitation, and
(B)the 25-year period
referred to in such paragraph shall be suspended during reasonable periods of
renovation.
Communication under subparagraph
(A)(v) shall not necessarily require expenditure of monies for advertising, but
should include periodic contact with groups such as State and local historic
agencies and tourism boards.(d)Tax treatment of
dispositions and failure To comply with agreement
(1)Imposition of
additional estate taxIf, during the 25-year period referred to
in subsection (c)(1)(C)—
(A)any person signing
the written agreement referred to in subsection (a)(2) disposes of any interest
in the building subject to such agreement, or
(B)there is a
violation of any provision of such agreement (as determined under regulations
prescribed by the Secretary),
then there
is hereby imposed an additional estate tax.(2)Exception for
certain transferees who agree to be bound by agreementNo tax
shall be imposed under paragraph (1) by reason of any disposition if the person
acquiring such interest—
(A)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
(B)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.
(3)The amount of the additional tax imposed by
paragraph (1) with respect to any property shall be an amount equal to the
excess of—
(A)what would (but
for subsection (a)) have been the tax imposed by section 2001 (reduced by the
credits allowable), over
(B)the tax imposed by
section 2001 (as so reduced).
(4)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).
(5)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.
(6)Certain other
rules to applyRules similar to the rules of sections 1016(c),
2013(f), and 2032A(f) shall apply for purposes of this
subsection.
.
(b)Coordination
with gift taxSection 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:
(c)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.
.
(c)
(1)Subparagraph (A)
of section 2056A(b)(10) of the Internal Revenue Code of 1986 is amended by
inserting 2032B,
after 2032A,
.
(2)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.
.
(d)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.