An Analysis of IRS Concerns with Conservation Easement Charitable Deductions Available to Purchase

ABSTRACT: Over the past 30 years conservation easements have become an increasingly popular tool available to private landowners for protecting endangered natural areas, scenic properties, and working farms and forests. In addition, the charitable contribution deduction allowed for qualified conservation easement contributions has grown from an obscure and technical type of contribution to one of the most popular and significant types of charitable deductions available to taxpayers. Conservation easement contributions have also created a tugging match between those who write federal tax law and those who enforce it. Congress has generally looked on conservation easements favorably, and has increased the tax benefits of such contributions over time, while the IRS has listed contributions of conservation easements as an important source of tax evasion. This conflict leaves taxpayers in the middle, faced with the necessity of carefully planning qualifying conservation easement contributions in this difficult environment. The purpose of this article is to identify critical tax planning issues for those considering conservation easement transactions in light of IRS concerns.