Conservation Easements: Defending IRS Challenges, Overcoming Audits, Structuring Deed Language for Perpetuity

Guidance for Donors and Beneficiary Land Trusts

Recording of a 90-minute CLE webinar with Q&A


Conducted on Thursday, September 13, 2018

Recorded event now available

or call 1-800-926-7926
Program Materials

This CLE webinar will address how to defend IRS attacks on conservation easement deductions. The panel will discuss the most common methods of attack, the impact on the transaction’s viability, and guidance on staving off challenges and preserving both the deal and the tax benefits for potential donors.

Description

Conservation easements are as varied in purpose as the land they protect. The easements are individually tailored to meet specific conservation objectives as well as the needs of the landowner. The conservation objective can be specific, like protecting water quality or an animal habitat; or structured broadly to accomplish more generalized preservation efforts like safeguarding farmland or ensuring views remain unobstructed.

In the case of donated conservation easements, the benefit to donor-landowners can be myriad, not the least of which are the considerable tax advantages available. Recent IRS attacks on those benefits have been rooted firmly in challenging the issue of perpetuity.

Practitioners structuring conservation easements must be wary of the IRS’ most common methods of attack and careful to employ language capable of deflecting those challenges. The proceeds clause, for example, provides the agency with a multi-tiered opportunity to unseat landowners’ deduction rights based on a violation of the perpetuity requirement.

IRS assertions include: the proceeds allocation formula fails to protect conservation purposes, reserving proceeds attributable to post-easement improvements frustrates perpetuity, and land trusts must have a vested interest in proceeds of third-party contracts like insurance coverage. IRS actions are increasingly causing attorneys to craft deed language that preserves easement deductions for donors.

Listen as our panel of attorneys discusses how to structure conservation easements to withstand IRS attacks, and offers practical guidance on overcoming challenges once presented.

READ MORE

Outline

  1. Conservation easements overview
  2. Preserving the deduction through careful drafting
    1. Guidance for donor-landowners
    2. Guidance for donees
  3. Troublesome clauses
    1. Deemed consent provisions
    2. Proceeds clause
      1. Proceeds allocation formula
      2. Proceeds attributable to post-easement improvements
      3. Proceeds from third-party contracts
    3. Amendment clause
    4. Merger clause
    5. Reserve development sites
    6. Form 8283
  4. Case law developments

Benefits

The panel will review these and other key issues:

  • What are the most common methods of attack on easement deductions?
  • How can counsel reconcile the apparent discrepancy in how tax courts and the IRS address perpetuity issues in conservation easement deeds?
  • What are the more troublesome agreement provisions for counsel preparing a sturdy conservation easement?

Faculty

Asbury, Anson
Anson H. Asbury, J.D., LL.M.

Founder and Principal
Asbury Law Firm

Mr. Asbury has represented clients in federal and state tax controversies, tax litigation, business tax planning and...  |  Read More

Rhodes, Gregory
Gregory P. Rhodes

Shareholder
Sirote & Permutt

Mr. Rhodes’ practice focuses on tax controversy and litigation work, as well as tax planning for individuals and...  |  Read More

Thoni, Tucker
Tucker J. Thoni

Atty
Sirote & Permutt

Mr. Thoni practices in the firm’s Tax Controversy group and Corporate Tax and Benefits Department.  His...  |  Read More

Other Formats
— Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video

$297

Download

$297