Easement Donation Disqualification for Reserved Rights of Surface Mining Methods

Recent advice from the IRS Office of Chief Counsel reiterates the IRS’s position on perpetual conservation easements on land where the landowner retains the rights to extract minerals using surface mining methods. The IRS announced its position that a landowner’s retention of rights to use surface mining methods of their unsevered mineral interests would disqualify the easement donation as a charitable deduction. This position could significantly impact conservation easements on working lands allowing agricultural “borrow pits” and the removal or extraction by surface mining methods of gravel, sand or other surface mining materials to build or maintain roads on the protected property.

January 2023 update: More detail added concerning deductible conservation easements with severed mineral interests.