The Land Trust Alliance has long held that amendment clauses in conservation easements serve to strengthen easements and improve their enforceability. That's why we oppose efforts by the IRS to constrain the ability of land trusts to amend easements.
And now — thanks to a recent federal court decision — it's clear that a sound amendment clause upholds conservation purposes.
In the case ofPine Mountain Preserve, LLLP v Commissioner, the United States Tax Court definitively asserted that the inclusion of an amendment clause in an easement cannot and should not be grounds for denying a deduction for an easement donation. The court said an amendment clause that specifically protects the conservation purposes "did not prevent that easement from satisfying the granted-in-perpetuity requirement" of the tax code.
Donors and land trusts can now feel confident including a sound amendment clause in a conservation easement. Be sure to review Risk Management Pointers to reduce the risk of audit and help limit problems if there is an audit.
The Tax Court referenced legal briefs the Alliance filed. The court read and quoted from our briefs, ultimately supporting our position that well-drafted amendment clauses are consistent with an easement's goal of perpetual conservation. We made these arguments on your behalf — and the court embraced our position.
But our work is not done. The IRS continues to increase its scrutiny of conservation easements on audit. Additionally, the Pine Mountain decision left unsettled a matter concerning permitted building rights. This is a complicated issue and we are evaluating how to move forward on behalf of land trusts and their donors. There will be more to come on this issue, so stay tuned.
In the meantime, though, I'm celebrating a big win for perpetuity, keeping conservation relevant and sensible stewardship!
