Tax-Deductible Conservation Easements: Creation, Analysis, Litigation

By Richard F. Riley*

The Internal Revenue Service ("IRS") and state tax authorities have announced that real estate conservation easements – especially their proper valuation – will be a major focus of tax enforcement activity (audits and litigation). Foley & Lardner LLP has the experience and knowledge to assist with the defense of challenged conservation easements, analyze proposed easements, and structure new easements designed to withstand potential challenge to the greatest extent possible.

The creation and donation of conservation easements on real estate – urban or rural; undeveloped or developed; agricultural, commercial, or residential – can, if properly structured and valued, be a major tax saving opportunity for individual and corporate property owners and a source of substantial donated assets for nonprofit conservation organizations and government conservation agencies. The IRS is likely to audit tax returns claiming deductions for conservation easements, so properly