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David Sparks Ph.d IRS Rule Change
by David Sparks Ph.d, click here for bio

Program: Line on Agriculture
Date: October 26, 2018

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The American Farm Bureau Federation is recommending the IRS change a proposed amendment to the tax code because it threatens the viability of key programs that work to preserve farmland and open space. The proposed changes, under section 170 of the tax code, would reduce the federal charitable deduction for a donated conservation easement by the amount of a state tax credit.

“Protecting and conserving farmland, pasture, ranchland, and woodlots is a priority for American farmers and ranchers. One way to do so is to permanently separate the right to develop property from the remaining property rights by entering into a conservation easement agreement with a third party such as a conservation organization,” Farm Bureau explained in comments to the agency.

Conservation easements are valued at the difference between the market value of a property before the easement and the market value of the property after the easement. The difference can be significant, and when donated, the conservation easement value may be eligible for state tax credits, in addition to a federal charitable deduction.

Based on Farm Bureau’s belief that there should be a federal tax deduction for the full and fair value of a donated development right, the organization is recommending the IRS change its proposed rule so that a federal charitable deduction is not reduced by the amount of state tax credits for donated conservation easements.

“Absent such a change, the proposed rule will diminish incentives for preserving farmland and make it financially impossible for some landowners to participate in farmland preservation programs that benefit all persons,” Farm Bureau wrote.

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