Limitation on deduction for qualified conservation contributions made by pass-through entities

(A) In general A contribution by a partnership (whether directly or as a distributive share of a contribution of another partnership) shall not be treated as a qualified conservation contribution for purposes of this section if the amount of such contribution exceeds 2.5 times the sum of each partner’s relevant basis in such partnership.

(B) Relevant basis For purposes of this paragraph— (i) In general The term “relevant basis” means, with respect to any partner, the portion of such partner’s modified basis in the partnership which is allocable (under rules similar to the rules of section 755) to the portion of the real property with respect to which the contribution described in subparagraph (A) is made. (ii) Modified basis The term “modified basis” means, with respect to any partner, such partner’s adjusted basis in the partnership as determined— (I) immediately before the contribution described in subparagraph (A), (II) without regard to section 752, and (III) by the partnership after taking into account the adjustments described in subclauses (I) and (II) and such other adjustments as the Secretary may provide.

(C) Exception for contributions outside 3-year holding period Subparagraph (A) shall not apply to any contribution which is made at least 3 years after the latest of— (i) the last date on which the partnership that made such contribution acquired any portion of the real property with respect to which such contribution is made, (ii) the last date on which any partner in the partnership that made such contribution acquired any interest in such partnership, and (iii) if the interest in the partnership that made such contribution is held through 1 or more partnerships— (I) the last date on which any such partnership acquired any interest in any other such partnership, and (II) the last date on which any partner in any such partnership acquired any interest in such partnership.

(D) Exception for family partnerships (i) In general Subparagraph (A) shall not apply with respect to any contribution made by any partnership if substantially all of the partnership interests in such partnership are held, directly or indirectly, by an individual and members of the family of such individual. (ii) Members of the family For purposes of this subparagraph, the term “members of the family” means, with respect to any individual— (I) the spouse of such individual, and (II) any individual who bears a relationship to such individual which is described in subparagraphs (A) through (G) of section 152(d)(2).

(E) Exception for contributions to preserve certified historic structures Subparagraph (A) shall not apply to any qualified conservation contribution the conservation purpose of which is the preservation of any building which is a certified historic structure (as defined in paragraph (4)(C)).

(F) Application to other pass-through entities Except as may be otherwise provided by the Secretary, the rules of this paragraph shall apply to S corporations and other pass-through entities in the same manner as such rules apply to partnerships.

(G) Regulations The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this paragraph, including regulations or other guidance— (i) to require reporting, including reporting related to tiered partnerships and the modified basis of partners, and (ii) to prevent the avoidance of the purposes of this paragraph.