And the values that were upheld were quite substantial – in excess of $200,000 per acre. Also – earlier segments of this case confirmed the qualification of the land trust – NALT - and cleared the conservation purposes test – on a golf course!

~Nancy Zak
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In Kiva Dunes Conservation LLC et al. v. Commissioner; T.C. Memo. 2009-145; No. 13196-06 (22 Jun 2009), the Tax Court approved the deduction for a gift of a conservation easement.

On June 6, 1992, Mr. E. A. Drummond purchased a parcel in Alabama from the Resolution Trust Corporation (RTC). The RTC was selling at auction various properties recovered from banks and savings and loans that had become insolvent during the 1990 real estate crash. The purchase price for the 228 acre parcel was $1,050,000.

Mr. Drummond formed B&E Investments, LLC and elected to be taxed as a partnership. He conveyed the property to the partnership and commenced development of a resort community named Kiva Dunes. The resort community began selling lots in 1995.

In 2002, he transferred 140.9 acres of property on which was placed a golf course to the Kiva Dunes LLC. On December 31, 2002, Kiva Dunes, LLC transferred a perpetual conservation easement on the golf course to the North American Land Trust (NALT). Appraiser Claude Clark was hired to determine the value of the perpetual conservation easement and he claimed a contribution deduction value of $30,588,235. Kiva Dunes also made a $35,000 cash contribution to NALT.

The IRS denied the deduction and the Tax Court proceeding ensued.

In the Tax Court, the IRS conceded that the perpetual easement did fulfill the requirements of a qualified conservation contribution and therefore would produce a charitable deduction under Sec. 170(a). The deduction would depend on a “before and after” determination of value.

Appraiser Clark determined that the highest and best use of the golf course property would be as a subdivision. The property would have permitted the creation of 370 lots. Based on comparables in the county, he determined that the value of each lot would be $170,000 and lot sales would occur at a rate of 37 per year, for a total sale period of ten years.

IRS Appraiser Philip Paulk claimed that the land would only support 300 lots, that the value per lot would be $85,000 and the sales would occur over 15 years. His estimated “before” value was approximately 1/3 of that of Mr. Clark.

The Court determined that the analysis by Claude Clark was correct with respect to the number of lots, was persuasive with his value per lot and accurate in projecting the sale duration. Therefore, the Court accepted the “before” value of $31,938,985 as claimed by Mr. Clark.

The remaining issue was the “after” value. Mr. Clark used five comparable properties within the same county to determine the value. The Court accepted his determination with an adjustment for both the improvements and previously-claimed depreciation. Based upon the before and after value establishment by Mr. Clark, the charitable deduction was approved for $28,656,004.

Editor’s Note: Mr. Clark was the most experienced appraiser in the county surrounding Kiva Dunes. He was very credible and the Tax Court accepted his interpretation of all the key valuation issues. This case highlights the importance of securing the services of a capable and respected appraiser.

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WSB-TV and The Trust For Public Land: Calling All Conservation-Friendly Citizens

Cox Conserves Heroes program to include public nominations, online voting

ATLANTA (May 26, 2009) — Do you know an everyday hero who is making great strides today to ensure a greener tomorrow? WSB-TV Channel 2, in partnership with The Trust for Public Land (TPL), today launched Cox Conserves Heroes - Atlanta, a national awards program to honor and celebrate conservation in everyday life. Cox Conserves Heroes-Atlanta is now accepting nominations. The Cox Conserves Hero, chosen by online consumer voting, will be awarded $5,000 to donate to the environmental nonprofit of his or her choice.

“The Trust for Public Land’s mission is to conserve land for people to use and enjoy forever, so we are thrilled to partner with Cox to identify and honor people who are making a personal difference in Atlanta,” said TPL’s Georgia Director, Helen Tapp. “We’re fortunate to have engaged citizens who want to be actively involved in creating more greenspaces, promoting environmental best practices and enhancing the quality of life in the metro area.”

WSB-TV Channel 2 Action News reporter Justin Farmer will broadcast public service announcements encouraging viewers to nominate people in their community who are helping to create, preserve or enhance places for everyone to enjoy - parks, greenways, gardens, waterways, plazas, streets and public squares.

By improving our shared environment, these conservation heroes make Atlanta a better place for everyone to live. Following the nomination stage, finalists will be selected by the Cox Conserves Judging Circle, a group of local civic leaders. Their stories can be accessed at CoxConservesHeroes.com, so the public can learn more about the finalists before voting. The finalist receiving the most online votes will be named the Cox Conserves Hero.

Cox Conserves Heroes Timeline:

• May 26 – June 19: “Call for Nominations.” The public can visit CoxConservesHeroes.com to nominate an individual;
• August 10 – August 31: “Cast Your Vote.” The public can view videos of the finalists and cast their vote;
• September: “Cox Conserves Hero Announcement.” Following the online voting, Atlanta’s Cox Conserves Hero will be announced in early September.

By showcasing these unsung heroes, WSB-TV and TPL hope to inspire more people to take an active role in neighborhood conservation activities. The Cox Conserves Heroes program was created in 2007 through a partnership between The Trust for Public Land and Cox Enterprises, the parent company of WSB-TV. The partnership stems from Cox Enterprises’ national Cox Conserves program designed to reduce the company’s carbon footprint by 20 percent by 2017, and promote eco-friendly behavior among its employees, communities and other corporations. The Cox Conserves Heroes program is active in Seattle and San Diego and will launch in San Francisco and New Orleans this year.

Media Contacts:

Elizabeth Halter
678-645-0762

Ellen Adair Wyche
The Wyche Group for The Trust for Public Land
404- 233-4480

Make your nomination here

Read the Press Release

Atlanta, April 6, 2009: Two important bills – H.R. 1831 and S. 812 – have been introduced in Congress to make the enhanced conservation easement tax incentive permanent. Senators Max Baucus (D-MT) and Charles Grassley (R-IA) have already signed on as a co-sponsor of this legislation, which will aid in the protection of millions of acres of America’s agricultural lands, historic landscapes, natural resources and wide open spaces. The expiring incentive allows modest-income landowners to receive significant tax savings for donating conservation easements that permanently protect important resources on their land.

Importantly, the enhanced incentive is an invaluable conservation tool that Forever Forests has used to protect over 10,000 acres since it was first enacted in 2006. The tax savings have benefited many local landowners who have recently conserved their land with us; the incentive has also helped to increase landowner interest in working with us to conserve their land.

The 2008 Farm Bill recently extended a 2006 incentive that enables family farmers, ranchers, and other moderate-income landowners to get a significant tax benefit for donating a conservation easement on their land. The legislation allows easement donors to:

• Deduct up to 50% of their adjusted gross income in any year (up from 30%);
• Deduct up to 100% of their adjusted gross income if the majority of that income came from farming, ranching or forestry; and
• Continue to take deductions for as long as 16 years (up from 6 years).

Forever Forests champions these bills and is working with our Congressional delegation as well as the Land Trust Alliance to secure their passage to make the incentive permanent.

Generous landowners who donate voluntary conservation easements to a land trust are inspired by many things: they love the region and territory, they feel connected to their land, and they wish to leave a legacy for future generations. This inspiration is central to our work to permanently protect valuable natural resources.

For almost all of our donors, donating a conservation easement is a major financial decision, and the federal income tax deduction that comes with a donation helps make easements possible for landowners in our community. Unless Congress acts, those federal tax benefits will be dramatically scaled back at the end of 2009.

Each day we are touched by the generous and inspired landowners who work with us. A permanent incentive will make it easier for others in our community to build on their love of the land and permanently protect valuable lands for future generations.

Land conservation takes a team to be successful. We thank our conserved landowners and our Congressional delegation for their invaluable contributions.

To learn more about these new developments, visit: www.foreverforests.net or www.LandTrustAlliance.org

Contact: Nancy Zak
Forever Forests
Phone: 770-345-9457
Fax: 770-479-5494