S 664

112th CONGRESS
1st Session

S. 664

To amend the Internal Revenue Code of 1986 to clarify the capital gain or loss treatment of the sale or exchange of mitigation credits earned by restoring wetlands, and for other purposes.

IN THE SENATE OF THE UNITED STATES

March 29, 2011

Ms. LANDRIEU (for herself and Mr. CRAPO) introduced the following bill; which was read twice and referred to the Committee on Finance


A BILL

To amend the Internal Revenue Code of 1986 to clarify the capital gain or loss treatment of the sale or exchange of mitigation credits earned by restoring wetlands, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the `Wetlands Conservation Investment Act of 2011'.

SEC. 2. CLARIFICATION OF TREATMENT OF SALES OR EXCHANGES OF WETLAND MITIGATION CREDITS AS LONG-TERM CAPITAL GAIN OR LOSS.

    (a) In General- Part IV of subchapter P of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 1257 the following new section:

`SEC. 1257A. GAINS OR LOSSES FROM SALES OR EXCHANGES OF WETLANDS MITIGATION CREDITS.

    `(a) General Rule- Gain or loss attributable to the sale or exchange of a mitigation bank credit by the sponsor of the mitigation bank who earned such credit shall be considered the sale or exchange of a capital asset held for more than 1 year.

    `(b) Definitions- For purposes of this section, the terms `mitigation bank' and `mitigation bank credit' have the respective meanings given such terms by part 332 of title 33 of the Code of Federal Regulations.'.

    (b) Clerical Amendment- The table of sections for part IV of subchapter P of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 1257 the following new item:

      `Sec. 1257A. Gains or losses from sales or exchanges of wetlands mitigation credits.'.

    (c) Effective Date- The amendments made by this section shall apply with respect to sales or exchanges of mitigation bank credits occurring before, on, or after the date of enactment of this Act.

SEC. 3. EXEMPTION OF WETLAND MITIGATION CREDIT SALES FROM FIRPTA.

    (a) In General- Section 897(c)(6) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

        `(D) EXEMPTION OF WETLAND MITIGATION CREDIT SALES- The term `United States real property interest' does not include any mitigation bank credit (as defined in part 332 of title 33 of the Code of Federal Regulations.'.

    (b) Conforming Amendment- Section 897(c)(1)(A) of the Internal Revenue Code of 1986 is amended by inserting `and paragraph (6)(C)' after `subparagraph (B)'.

    (c) Effective Date- The amendments made by this section shall apply with respect to sales or exchanges of mitigation bank credits occurring before, on, or after the date of enactment of this Act.

END