IRS final regulation to implement the Charitable Conservation Easement Program Integrity Act

The IRS issued final regulations on June 28 to implement the Charitable Conservation Easement Program Integrity Act, which Congress passed in 2022 to identify and halt abusive syndicated conservation easement transactions. The Alliance is thoroughly analyzing the 151 pages of regulations and IRS commentary, so land trusts do not need to worry about the details. We will update our guidance for members, if needed, as soon as possible. But the main takeaway is that land trusts following Land Trusts Standards and Practices are in good shape even in light of the new regulations.

We do appreciate that the IRS took the Alliance’s comments to the draft regulations seriously and made a few changes based on our concerns. For example, the IRS resolved, to an extent, which regulatory provisions apply only to syndications and which apply to every entity donating a conservation easement. Furthermore, the IRS revised the latest iteration of Form 8283’s instructions to make important clarifications in response to our comments such as how to document basis and what signatures are needed.

The final regulations are technical and complex and highly focused on accounting and partnership law for entities that donate conservation easements. As a general summary, they detail the disallowance of an income tax deduction for a conservation easement donation made by an entity after December 29, 2022, if the amount of the contribution exceeds 2 ½ times the sum of each entity’s member’s relevant basis. The regulations cover definitions, methods to calculate the basis, details for the three statutory exceptions and reporting requirements.

More to come soon.