Enhanced tax incentives for land conservation easements have been extended with the recent enactment of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. This Act extends the 2006 Enhanced Easement Incentive through December 31, 2011, and makes the increased tax incentives retroactive for 2010.
The Enhanced Easement Incentive provides that an individual landowner may take an income tax deduction for a qualifying donation of a conservation easement of up to 50% of the landowner’s Adjusted Gross Income for the year, with a 15-year carry-forward of any unused deduction. Prior to 2006, an individual could take only a 30% deduction and had a carry-forward of only 5 years.
Additionally, the Enhanced Easement Incentive provides that a landowner (either an individual or a corporation) who is a qualified farmer or rancher may take a deduction for up to 100% of Adjusted Gross Income (for individuals) or taxable income (for corporations) with a 15-year carry-forward of any unused deduction. A qualified farmer or rancher is generally defined as an owner whose gross income from farming or ranching is greater than 50% of the taxpayer’s gross income for the year.
Readers should consult with an experienced tax adviser regarding the applicability of these tax incentives to their particular situation. To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal law advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code.