|
articles & updates | article
Memo to the Senate Committee on Finance
by Stephen J. Small, Esq.
What the Problem is Not
Donors and donees are not making bad decisions. Much of the criticism of Section 170(h) in the Joint Committee Report and in some published commentary sounds good to its proponents but it is purely "theoretical" and has no basis in fact or in actual practice. Land trust donees are not operating in bad faith or making stupid decisions that are inconsistent with their charitable status. The overwhelming majority of land trust donees are not operating in collusion with rich donors to cook up inflated income tax deductions for meaningless gifts that serve no conservation purpose. Again, there are hundreds of land trust donees around the country that can confirm this. It is easy to shine the spotlight on the bad guys and the bad deals, but it is every bit as important to listen to the good stories.
The problem is not that Section 170(h) is vague or unclear. It may have been arguable that when it became law in 1980 Section 170(h) was unclear, since it included some new terms and concepts that were not typical to the tax code. But now we have had more than two decades of successful experience with Section 170(h), more than forty private letter rulings and more than twenty court cases on how the code section works, and the people in the field understand it.
The Joint Committee has suggested that many conservation easement donations may not further a particular local government land use policy and therefore no deduction should be available for such easements. This suggestion also seems to come out of theoretical concerns that are just not relevant in the real world. Most (but not all) local government land use policy would in fact ultimately result in farmland, forestland, wildlife habitat, watershed, and ranchland being paved over and developed. Many private landowners simply do not want that to happen to their land, and many land trust donees were founded precisely because local private landowners did not want local government policy-makers to turn their communities into strip malls and parking lots.
Section 170(h) does not provide a "windfall" for landowners. If I put a conservation easement on my land, I have irrevocably given up the right to change my mind and I have irrevocably given up my opportunity to receive the windfall that would occur if I or my heirs sold the land for development. So the gift of a conservation easement is not a "windfall" for me, rather, it is an irrevocable commitment to protect my land (not just to think about protecting it), and the tax code provides an incentive for me to do that.
Repeating long-rebutted claims, the Joint Committee Report suggests that Section 170(h) provides a "windfall" for landowners who love their land and have no current intention to develop that land. This false claim is yet another of those arguments that may sound good in theory but misses the point. To make it very simple, if I love my land, and want to see it protected, there are two things I can do: (1) nothing; or, (2) put a conservation easement on it. If I do nothing, I could some day change my mind, or die, or suffer a business or family reversal, and the land will inevitably be developed.
|
