SENATE DOCKET, NO. 1299        FILED ON: 1/19/2017

SENATE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 1584

The Commonwealth of Massachusetts

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PRESENTED BY:

Kathleen O'Connor Ives

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To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:

The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:

An Act to establish estate tax valuation for farms.

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PETITION OF:

SENATE DOCKET, NO. 1299        FILED ON: 1/19/2017

SENATE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 1584

The Commonwealth of Massachusetts

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In the One Hundred and Ninetieth General Court
(2017-2018)

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An Act to establish estate tax valuation for farms.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
 

SECTION 1. Section 2 of chapter 62 of the General Laws, as appearing in the 2014 Official Edition, is hereby amended by inserting at the end of paragraph (3) of subsection (b), in line 247, the following paragraph:-

For the purposes of this subsection, notwithstanding an election made under subsection (c) of section 5 of chapter 65C, the basis of real property valued as closely held agricultural land shall be the basis determined under paragraph (2) of said subsection (c) of chapter 65C.

SECTION 2. Section 1 of chapter 63 of the General Laws, as so appearing, is hereby amended by inserting, in line 204, at the end of the definition of “Net income”, the following paragraph:-

For the purposes of this subsection, notwithstanding an election made under subsection (c) of section 5 of chapter 65C, the basis of real property valued as closely held agricultural land shall be the basis determined under paragraph (2) of said subsection (c) of chapter 65C.

SECTION 3. Section 5 of chapter 65C of the General Laws, as so appearing, is hereby amended by striking out subsection (c) and inserting in place thereof the following 3 subsections:-

(c)(1) If the gross estate of a decedent includes real property devoted to use as a farm for farming purposes, the estate may elect to either value such property in accordance with section 2032A of the Code, in effect on January 1, 1985 or, if the gross estate of a decedent includes real property devoted to use for closely held agricultural land, the value of such land shall be valued pursuant to the valuation set by the farmland valuation advisory commission established pursuant to section 11 of chapter 61A for the fiscal year of the most recent growing season. If a federal return is required to be filed the election under this subsection shall be consistent with the election made for federal estate tax purposes. All the substantive and procedural provisions of said section 2032A shall, insofar as pertinent and consistent, apply to the election made under this subsection. The commissioner shall promulgate regulations to carry out the provisions of this subsection and subsections (d)-(e).

(2) For the purposes of determining Massachusetts gross income under section 2 of chapter 62 or net income under section 1 of chapter 63, the basis of real property valued as closely held agricultural land, notwithstanding an election made under this subsection, shall be determined as follows: if such property is sold for other use within a period of ten years from the date of acquisition, the basis shall be the valuation determined in paragraph (1); if such property is sold for other use more than ten years from the date of acquisition, the basis shall be the full and fair value of such land under the valuation standard applicable to other land in the city or town when ownership was first transferred to the taxpayer.

(d) Land shall qualify for valuation as closely held agricultural land under subsection (c) of this section if it meets the definition of: forest land under chapter 61; land in agricultural or horticultural use under chapter 61A;  recreational land under chapter 61B that is also used for farming or agriculture, as defined in section 1A of chapter 128; provided that the land need not be classified by municipal assessors as forest land under chapter 61, land in agricultural or horticultural use under chapter 61A or recreational land under chapter 61B to qualify for valuation as closely held agricultural land under said subsection (c) if it otherwise meets the applicable definitions.

(e)When land valued as closely held agricultural land under said subsection (c) no longer meets the definition of forest land under chapter 61, land in agricultural or horticultural use under chapter 61A, recreational land under chapter 61B that is used for farming or agriculture as defined in section 1A of chapter 128, the land shall be subject to a roll-back tax in the current tax year in which it is disqualified, which shall equal the amount that would have been due, with respect to such land, under this chapter at the time of acquisition calculated using the full and fair value of the land under the valuation standard applicable to other land in the city or town, minus the amount which was due and payable as a result of an election made under subsection (c) at the time of acquisition.