Conservation Easements and the Valuation Conundrum

Abstract

The Internal Revenue Service (IRS) first officially sanctioned a charitable income tax deduction for the donation of a conservation easement in 1964. In 1980, Congress enacted § 170(h), which authorizes a deduction for the donation of a conservation easement or a façade easement that is “granted in perpetuity” to a government entity or charitable organization “exclusively for conservation purposes.” The deduction has encouraged thousands of property owners to donate easements that protect land and historic structures with important conservation and historic values. The deduction has also, however, been subject to abuse, including valuation abuse.