PETITION OF:

SECTION 1. This act shall be known as the "Massachusetts Land Conservation Incentives Act."

SECTION 2. WHEREAS, the land and water in the commonwealth provide a variety of important public benefits, including, but not limited to, the protection of drinking water supplies, wildlife habitat and biological diversity, agricultural and forestry production, recreational opportunities, archaeological and historical resources, or scenic and cultural values, but these privately-owned lands are being permanently developed at an alarming rate;

WHEREAS, private landowners should be encouraged by the commonwealth to be stewards of their lands for the protection of public benefits, including, but not limited to, drinking water supplies, wildlife habitat and biological diversity, agricultural and forestry production, recreational opportunities, archaeological and historical resources, or scenic and cultural values; and

WHEREAS, the commonwealth should provide private landowners with incentives to encourage and enhance the conservation of such lands.

SECTION 3. Section 6 of chapter 62 of the General Laws, as appearing in the 2004 Official Edition, is hereby amended by adding the following new subsection:-

(m) (1) As used in this subsection the following words shall have the following meanings:--
“Bargain sale,” the sale of an interest in real property by a taxpayer at a cost below appraised market value, when a portion of the value of the interest in real property is a qualified donation, as such terms are defined herein, and which meets the requirements of Section 1011(b) of the Internal Revenue Code of 1986, as amended.

"Certified land" or "certified lands," an interest in real property, as defined herein, the donation or bargain sale of which, as defined herein, has first been determined by the secretary of environmental affairs to be in the public interest for natural resource protection, including, but not limited to, drinking water supplies, wildlife habitat and biological diversity, agricultural and forestry production, recreational opportunities, archaeological and historical resources, or scenic and cultural values. The secretary of environmental affairs shall assure that all certified lands are protected in perpetuity.

"Interest in real property," any right in real property in the commonwealth, with or without improvements thereon, or water, including, but not limited to, fee simple, life estate, restriction, easement, covenant, condition, partial interest, remainder, future interest, lease, license, mineral right, riparian right, or other interest or right in real property that may be conveyed concerning the power to transfer property.

"Public or Private Conservation Agency," the commonwealth, or any subdivision thereof, or any municipality, or private nonprofit corporation organized for the purposes of land conservation, which is authorized to do business in the commonwealth, and which has tax-exempt status as a nonprofit charitable organization as described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.

“Qualified donation,” a donation, or the donated portion of a bargain sale, made in perpetuity of a fee interest in real property or a less-than-fee interest in real property, including a conservation restriction, agricultural preservation restriction or watershed preservation restriction, pursuant to chapter 184 of the general laws, provided that such less-than-fee interest meets the requirements of Qualified Conservation Contributions under the Internal Revenue Code of 1986, Section 170(h).

“Taxpayer,” a taxpayer subject to the income tax under this chapter.
(2) A taxpayer making a qualified donation of certified land to a public or private conservation agency shall be allowed a credit against the taxes imposed by this chapter. The credit shall be equal to 50 percent of the fair market value of the qualified donation. The amount of the credit that may be claimed by a taxpayer for each qualified donation shall not exceed $50,000.

(3) The fair market value of certified land shall be substantiated by a Qualified Appraisal, as defined in United States Treasury Regulation Section 1.170A-13(c)(3), and shall be prepared by a Qualified Appraiser, as defined in United States Treasury Regulation Section 1.170A-13(c)(5). For any taxpayer to qualify for the credit provided for in subdivision (2) of this section, the taxpayer shall at the same time as the taxpayer files a return for the taxable year in which the credit is claimed, file with the department a summary of a Qualified Appraisal, or if requested by said department, the taxpayer shall submit the appraisal itself.

(4) In any one tax year the credit used may not exceed the amount of tax liability otherwise owed by the taxpayer. The tax credit shall be taken against the taxes imposed under this chapter and shall not be refundable. Any amount of the credit that exceeds the tax due for a taxable year may be carried forward by the taxpayer to any of the 10 subsequent tax years.

(5) The tax credits provided by this subsection shall apply to transfers of interests in real property in taxable years beginning on or after January 1, 2008 and consecutive taxable years thereafter.

(6) All or any tax credits issued in accordance with this section may be in addition to any charitable deductions claimed on the taxpayer’s federal income tax return for the same qualified donations of certified lands.

(7) Any taxpayer claiming a state income tax or excise tax credit under this section may not claim an additional state income tax credit or deduction during any one tax year for costs related to the same interest in certified lands.

(8) All or any tax credits which arise under this section from the qualified donation of certified land by a pass-through tax entity such as a trust, estate, partnership, corporation, limited partnership, limited liability partnership, limited liability corporation, subchapter S organization, or other fiduciary, shall be used either by such entity in the event it is the taxpayer on behalf of such entity or by the member, partner, shareholder, or beneficiary, as the case may be, in proportion to their interest in such entity in the event that income, deductions, and tax liability passes through such entity to such member, partner, shareholder, or beneficiary. Such tax credits may not be claimed by both the entity and the member, partner, shareholder, or beneficiary, for the same conveyance.

(9) All or any tax credits which arise under this chapter from the qualified donations of certified land by a married couple shall be used only if the spouses file a joint return, if both spouses are required to file Massachusetts income tax returns. If only one spouse is required to file a Massachusetts income tax return, that spouse may claim the credit allowed by this chapter on a separate return.

SECTION 5. Chapter 63 of the General Laws, as so appearing, is hereby amended by adding the following new section:-

Section 38U. (a) As used in this section the following words shall have the following meanings:-
“Bargain sale,” the sale of an interest in real property by a taxpayer at a cost below appraised market value, when a portion of the value of the interest in real property is a qualified donation, as such terms are defined herein, and which meets the requirements of Section 1011(b) of the Internal Revenue Code of 1986, as amended.

"Public or private conservation agency," the commonwealth, or any subdivision thereof, or any municipality, or private nonprofit corporation organized for the purposes of land conservation, which is authorized to do business in the commonwealth, and which has tax-exempt status as a nonprofit charitable organization as described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.

“Taxpayer,” a taxpayer subject to the income tax under this chapter.
(b) Land Conveyed for Conservation Purposes. A taxpayer making a qualified donation of certified land to a public or private conservation agency shall be allowed a credit against the taxes imposed by this chapter. The credit shall be equal to 50 percent of the fair market value of the qualified donation. The amount of the credit that may be claimed by a taxpayer for each qualified donation shall not exceed fifty thousand dollars.

(c) The fair market value of certified land shall be substantiated by a Qualified Appraisal, as defined in United States Treasury Regulation Section 1.170A-13(c)(3), and shall be prepared by a Qualified Appraiser, as defined in United States Treasury Regulation Section 1.170A-13(c)(5). For any taxpayer to qualify for the credit provided for in subsection (b) of this section, the taxpayer shall at the same time as the taxpayer files a return for the taxable year in which the credit is claimed, file with the department a summary of a Qualified Appraisal, or if requested by said department, the taxpayer shall submit the appraisal itself.

(d) In any one tax year the credit used may not exceed the amount of tax liability otherwise owed by the taxpayer. The tax credit shall be taken against the taxes imposed under this chapter and shall not be refundable. Any amount of the credit that exceeds the tax due for a taxable year may be carried forward by the taxpayer to any of the 10 subsequent taxable years.

(e) The tax credits provided by this chapter shall apply to transfers of interests in real property in taxable years beginning on or after January 1, 2008 and consecutive taxable years thereafter.

(f) All or any tax credits issued in accordance with this section may be in addition to any charitable deductions claimed on the taxpayer’s federal income tax return for the same qualified donations of certified lands.

(g) Any taxpayer claiming a state income tax or excise tax credit under this section may not claim an additional state income tax credit or deduction during any one tax year for costs related to the same interest in certified lands.

(h) All or any tax credits which arise under this section from the qualified donation of certified land by a pass-through tax entity such as a trust, estate, partnership, corporation, limited partnership, limited liability partnership, limited liability corporation, subchapter S organization, or other fiduciary, shall be used either by such entity in the event it is the taxpayer on behalf of such entity or by the member, partner, shareholder, or beneficiary, as the case may be, in proportion to their interest in such entity in the event that income, deductions, and tax liability passes through such entity to such member, partner, shareholder, or beneficiary. Such tax credits may not be claimed by both the entity and the member, partner, shareholder, or beneficiary, for the same conveyance.

SECTION 7. (a) The secretary of the executive office of environmental affairs shall promulgate regulations that define land eligible for certification under this section 6 of chapter 62 and under section 38U of chapter 63. Regulations shall be promulgated within 180 days of passage of these sections.
(b) The secretary of environmental affairs, within five years of passage of this act, shall prepare a report to the joint committee on revenue and the joint committee on environment, natural resources and agriculture, describing the certified lands conserved under section 6 of chapter 62 and section 38U of chapter 63.

(c) The commissioner of revenue, in consultation with the secretary of the executive office of environmental affairs, shall promulgate regulations to administer under section 6 of chapter 62 and section 38U of chapter 63. Such regulations shall include provisions to prevent the generation of multiple credits with respect to the same property. Regulations shall be promulgated within 180 days of passage of this act.

(d) The commissioner, within five years of passage of this act, shall prepare a report to the joint committee on revenue and the joint committee on environment, natural resources and agriculture, calculating the annual tax savings under section 6 of chapter 62 and section 38U of chapter 63.

(e) There shall be a commission to study the transferability of tax credits under section 6 of chapter 62 and section 38U of chapter 63. The commission shall be composed of nine persons, including the commissioner of the department of agricultural resources, or his designee, who shall serve as chairman; the commissioner of the department of revenue, or his designee; two members of the house of representatives, to be appointed by the speaker of the house of representatives; two members of the senate, to be appointed by the president of the senate; a representative of the American Farmland Trust; a representative of the Massachusetts Audubon Society; a representative of The Nature Conservancy. The commission shall examine all aspects of transferability, including but not limited to: the status of its application in other states, potential fiscal impacts, and potential conservation benefits. The commission shall file a report of its findings and recommendations, including any drafts of legislation necessary to put its recommendations into effect, with the joint committee on revenue and joint committee on environment, natural resources and agriculture on or before January 1, 2009.

SECTION 8. Nothing in this act shall be interpreted in any way to alter or amend any permitting requirements, reporting requirements, allocation procedures, or other requirements set forth in any other provision of the general laws.