1. Short title
This Act may be cited as the “Farmers and Ranchers Minimizing Estate Regulations Act of 2013” or the “FARMER Act of 2013”.
Farmers and Ranchers Minimizing Estate Regulations Act of 2013
A BILL
To amend the Internal Revenue Code of 1986 to increase the aggregate reduction in the fair market value of farm, etc., real property under section 2032A to $2,000,000, and for other purposes.
2. Modifications to alternate valuation of farm, etc., real property
Maximum reduction increased to $2,000,000—
In general— Paragraph (2) of section 2032A(a) of the Internal Revenue Code of 1986 (relating to limitation on aggregate reduction in fair market value) is amended by striking “$750,000” and inserting “$2,000,000”.
Conforming amendment— The first sentence of section 2032A(a)(3) of such Code is amended to read as follows:
“(A) $2,000,000, multiplied by
“(B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting “calendar year 2011” for “calendar year 1992” in subparagraph (B) thereof.”
Reduction in required holding and use periods of decedent— Subparagraph (C) of section 2032A(b)(1) of such Code is amended—
by striking “8-year period” and inserting “5-year period”, and
by striking “5 years” and inserting “3 years”.
Reduction in required holding and use periods To avoid recapture—
In general— Paragraph (1) of section 2032A(c) of such Code is amended—
by striking “10 years” and inserting “5 years”, and
by striking subparagraph (B) and inserting the following new subparagraph:
“(B) there have been periods aggregating 3 years or more during which the qualified heir does not use for the qualified use the qualified real property which was acquired (or passed) from the decedent,”
Conforming amendment— Clause (ii) of section 2032A(c)(7)(A) of such Code is amended by striking “10-year” and inserting “5-year”.
Certain rents from controlled entities treated as qualified— Subparagraph (E) of section 2032A(c)(7) of such Code is amended by inserting “(or to an entity more than 50 percent (by vote and value) of the equity interests in which are owned directly by members of such family)” after “descendant”.
Repeal of use of gross cash rental of comparable land in valuing farms—
In general— Subparagraphs (A) and (B) of section 2032A(e)(7) of such Code (relating to method of valuing farms) are amended to read as follows:
“(A) In general—The value of a farm for farming purposes shall be determined by dividing—
“(i) the excess of the average annual net share rental for comparable land used for farming purposes and located in the locality of such farm over the average annual State and local real estate taxes for such comparable land, by
“(ii) the average annual effective interest rate for all new Federal Land Bank loans.
“(B) Net share rental—For purposes of this paragraph, the term net share rental means the excess of—
“(i) the value of the produce received by the lessor of the land on which such produce is grown, over
“(ii) the cash operating expenses of growing such produce which, under the lease, are paid by the lessor.”
Conforming amendment— Subparagraph (C) of section 2032A(e)(7) of such Code is amended by striking “that there is no comparable land from which the average annual gross cash rental may be determined, and”.
Effective date— The amendments made by this section shall apply to estates of decedents dying after the date of the enactment of this Act.
3. Woodlands subject to management plan
In general— Paragraph (2) of section 2032A(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:
“(F) Exception for woodlands subject to management plan—Subparagraph (E) shall not apply to any disposition or severance of standing timber on a qualified woodland if the harvest is—
“(i) consistent with a written forest management plan developed under the Cooperative Forestry Assistance Act of 1978 (16 U.S.C. 2103a), or an equivalent plan approved by the State Forester,
“(ii) conducted under the guidance of a qualified forestry professional (as determined by the Secretary in consultation with the United States Forest Service), or
“(iii) conducted on lands certified to a third-party audited forest certification system or similar land management protocol, as determined by the United States Forest Service.”
Effective date— The amendment made by subsection (a) shall apply to the disposition or severance of standing timber after the date of the enactment of this Act.