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"Land Trusts Should Be Aware of Proposed Easements Regulations"

April 21, 2023

Erin Hines article, “Land Trusts Should Be Aware of Proposed Easements Regulations,” in Bloomberg Tax

Bloomberg Tax

New proposals issued in December on conservation easement tax regulations may have unintended consequences for the donee community. Atlanta-based Senior Counsel Erin Hines explains in an article that published in Bloomberg Tax on April 23.

The IRS is considering the removal of a provision stating that a done organization is not treated as a material advisor. Being treated as a material advisor, as noted in Section 4965, will create additional disclosures and list maintenance obligations, the failure of which may result in penalties having greater consequences for donee organizations – potentially deterring some organizations from accepting conservation easement donations altogether.

Additionally, a donee organization may have to file a disclosure statement for each prohibited transaction, a difficult and potentially burdensome requirement as donee organizations must assess whether the easement qualifies as syndicated. 

Overall, “donee organizations need to be aware of the potential ramifications that eliminating or limiting the Section 4965 carveout will have. There’s a potential liability for excise taxes, increased costs associated with additional reporting and disclosure obligations, and potential penalties for failing to make the required disclosures,” Erin said.

To learn more, you may view the full article here.