Bill to Curb Conservation Easement Abuse

"It would limit tax deductions on conservation easements to 2.5 times the owners original cost for the property."

What if you bought the property 40-50 years ago or more, and its now worth 10-20x what you paid for it? It should be market value not what you paid, IMO, otherwise its value is not worth the deduction and would discourage people from enrolling.

I'm not that knowledgeable about this issue, but my family may be looking into doing this in the near future. What if the land is inherited, like 4 times, and it was originally a homestead? What is the original purchase price? I'm guessing the tax deduction its not 2.5 x $1.25/acre homestead purchase price.
 
Bambistew said:
"It would limit tax deductions on conservation easements to 2.5 times the owners original cost for the property."

What if you bought the property 40-50 years ago or more, and its now worth 10-20x what you paid for it? It should be market value not what you paid, IMO, otherwise its value is not worth the deduction and would discourage people from enrolling.

I'm not that knowledgeable about this issue, but my family may be looking into doing this in the near future. What if the land is inherited, like 4 times, and it was originally a homestead? What is the original purchase price? I'm guessing the tax deduction its not 2.5 x $1.25/acre homestead purchase price.
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This is a great example of why I have concerns about legislation like this. It could discourage people from entering into a conservation easement. How will long term family owned properties be treated? You should talk to a good land trust to see what your options are Bambi. Sooner the better.

Recently I read where Ted Turner had purchased the 113,000 acre Flying D for $200 an acre in 1989. Great price but that still comes $22 million in 1989 dollars. It has all been placed in a C E, and with wher developable land values are today in gallatin valley and Big Sky, it no doubt saved Ted from paying a lot in taxes. Likely paid for his original investment many times over.

Still I do like the undeveloped open space that has been conserved on the Flying D. Are we incentivizing wealthy people to hoard large properties in order to get a big tax break by doing this? Complicated issue for sure.
 
I would rather see wealthy landowners “hoarding” large properties and keeping the habitat intact than developers splitting off 10 acre chunks of winter range.
 
Conservation easements are one of my pet peeves. Most of them (not all) gain the public what? Nothing more than a view-shed of undeveloped land. We get no access, no opportunities and, even better, less tax revenue for the county/state. What a deal! Honestly, if we're going to give these large landowners tax breaks like this, then we, as the recipients of (of lack thereof) these tax dollars should get something more out of these deals. "ALL" conservation easements should come with unfettered access to the lands for recreational purposes. My opinion.

Using the Ted Turner example above, The former Flying D ranch (which once upon a time allowed the public to hunt there before he bought it) is now a trophy elk outfitter ranch where you can pay roughly $12 grand to come from your high-rise offices out east and bag that bull of a lifetime. Bonus is that you get a huge tax break and lock-down the land. Awesome. What did the public get out of this deal? No access and fewer tax dollars. Oh, but hey, we get to look at all that undeveloped land. Yay. Hmmmm. Seems a little one-sided to me.

<end rant>
 
widnert said:
Conservation easements are one of my pet peeves. Most of them (not all) gain the public what? Nothing more than a view-shed of undeveloped land. We get no access, no opportunities and, even better, less tax revenue for the county/state. What a deal! Honestly, if we're going to give these large landowners tax breaks like this, then we, as the recipients of (of lack thereof) these tax dollars should get something more out of these deals>
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My driveway is currently getting snowed on, and it's really cold out. Could you please send over one of your kids to shovel it since you get a tax break from having them. It's not fair if you get a tax break and your not sharing your kids labor

Oh, you have a mortgage, since you are taking a tax break on your interest, I guess I no longer need to use a hotel when I’m in your area, I can stay at your place.

Just because someone has something you want, doesn't mean you should be access to it if they receive a tax break on owning it.
 
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widnert said:
Conservation easements are one of my pet peeves. Most of them (not all) gain the public what? Nothing more than a view-shed of undeveloped land. We get no access, no opportunities and, even better, less tax revenue for the county/state. What a deal! Honestly, if we're going to give these large landowners tax breaks like this, then we, as the recipients of (of lack thereof) these tax dollars should get something more out of these deals. "ALL" conservation easements should come with unfettered access to the lands for recreational purposes. My opinion.

Using the Ted Turner example above, The former Flying D ranch (which once upon a time allowed the public to hunt there before he bought it) is now a trophy elk outfitter ranch where you can pay roughly $12 grand to come from your high-rise offices out east and bag that bull of a lifetime. Bonus is that you get a huge tax break and lock-down the land. Awesome. What did the public get out of this deal? No access and fewer tax dollars. Oh, but hey, we get to look at all that undeveloped land. Yay. Hmmmm. Seems a little one-sided to me.

<end rant>
Click to expand...

There's a reason they are called Conservation easements and not public access easements. I don't see anything wrong with protecting wildlife habitat, even if it means you and I can't have access to it. There's nothing conservative about unfettered access when it comes to wildlife. There's too many places like Bozeman where sprawl is infringing on wildlife habitat.
 
widnert said:
Conservation easements are one of my pet peeves. Most of them (not all) gain the public what? Nothing more than a view-shed of undeveloped land. We get no access, no opportunities and, even better, less tax revenue for the county/state. What a deal! Honestly, if we're going to give these large landowners tax breaks like this, then we, as the recipients of (of lack thereof) these tax dollars should get something more out of these deals. "ALL" conservation easements should come with unfettered access to the lands for recreational purposes. My opinion.

Using the Ted Turner example above, The former Flying D ranch (which once upon a time allowed the public to hunt there before he bought it) is now a trophy elk outfitter ranch where you can pay roughly $12 grand to come from your high-rise offices out east and bag that bull of a lifetime. Bonus is that you get a huge tax break and lock-down the land. Awesome. What did the public get out of this deal? No access and fewer tax dollars. Oh, but hey, we get to look at all that undeveloped land. Yay. Hmmmm. Seems a little one-sided to me.

<end rant>
Click to expand...

Um... habitat... "conservation easements should come with unfettered access to the lands for recreational purposes," so you think state/fed should buy land, I agree I would love to see more public land.

I understand your frustration but your position is incredibly myopic. Sure, you will likely never see a direct benefit from conservation easements, I would argue that some provide valuable habitat for wildlife and that there is spillover onto public land that you get to enjoy. Regardless of your position on this spillover, these lands are protected from development for those, to quote Roosevelt, "within the womb of time, compared to which those now alive form but an insignificant fraction." I think there is every reason to believe that in 100-150 years that population of Bozeman will 7x and that there will be uninterrupted sprawl from the Bridgers to the Madison, and that every large piece of private property will be purchased subdivided and built. You don't believe me look at Denver, the year my dad was born the population of the metro area was around 300,000 now it's 3 million.

Conservation easements are hedges on habitat/green space, they aren't meant to be the public's playground. Personally, I agree with the sentiments put forth by Steven Rinella when he expressed that he would want public lands and healthy herds to exist regardless of his ability to enjoy them. It saddens me when individuals like yourself take on the attitude, if I can't get mine burn it to the ground.
 
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widnert, to clear up a couple of common misconceptions. Conservation easements typically provide a landowner with a lump sum and some income tax advantages going forward. Property taxes are not changed, not reduced at all. The Flying D Ranch held antlerless elk hunts prior to and after the purchase by Turner. The ranch wildlife biologists along with FWP determined the viability / need for those hunts. Things have changed since then with respect to the elk. Flying D had an outfitting business on the ranch prior to and after Turner became owner; it's nothing new at all and really has no relationship with the previous antlerless elk hunts.

Personally, I support conservation easements in that they serve to at least slow down the historical and still ongoing loss of wildlife habitat and open space. As you point out, the Flying D Ranch is a good example of prime wildlife habitat that would certainly face the potential for development at some time without the protection of a conservation easement. I live near there and due to open public access through the property, I visit and recreate there often on the public thoroughfare. IMO, the Flying D's forested rolling hills, grasslands, and large open spaces abutting the Spanish Peaks comprise one of the most beautiful spots on earth. Having lived in the Gallatin area for over fifty-five years, I can tell you with some degree of certainty that if the Flying D and other large tracts were not protected by a conservation easement they would presently be covered with gated ranchettes and likely signage that would make you cringe!
 
bigsky2 said:
There's a reason they are called Conservation easements and not public access easements. I don't see anything wrong with protecting wildlife habitat, even if it means you and I can't have access to it. There's nothing conservative about unfettered access when it comes to wildlife. There's too many places like Bozeman where sprawl is infringing on wildlife habitat.
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CE are one of the few reasons why golden-winged warbler and other ESH dependent species have survived in my neck of the woods. And watching parcels go to the highest builder for 350-home sites to go on is fairly rough as well
 
Ducks Unlimited's golden boy, James Cox Kennedy, has been using this tactic to his advantage for quite a while.

I'm not sure where I fall on this issue.
 
From the article........

""From a Montana and national private land conservation perspective, this legislation is key to stopping abusive syndicated transactions while ensuring that tax incentives for land conservation remain available for landowners to help conserve open lands, family farms and ranches, wildlife habitat and so much more,” Montana Association of Land Trusts director Glenn Marx said in an email statement."

I've been to a couple presentations by Glenn and found him to be a knowledgeable person regarding the C E world and process. That he is quoted here with these concerns tells me that there are indeed abuses going on. What is the best way to stop them? Sometimes good faith legislation solves one problem and creates 2 new ones. Any thoughts?
 
smarandr said:
I lost a few large clients because I wouldn't give these transactions my blessing a couple of years ago. Is it wrong there's a small part of me that hopes the IRS nails their asses to the wall?
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I was at a party a couple of months ago and my friend (knowing I'm a recovering accountant) pulled me into a conversation and the guy was describing this exact type of transaction. He said, "yeah, we bought into a land through a partnership for $50,000 for 10% and it has a granite field underneath it. It's worth something like $30 or $40 million, but we can't harvest it so we're going to put it into a conservation easement and we get to take 10% of that 30 or 40 million valuation as a loss on our taxes."

Having very limited experience with CEs before, I asked how do you get an adjusted basis so quickly and so disparate from your at risk investment. He shrugged and said he didn't know, but his investment guy had it dialed. Now reading Notice 2017-10 and the article I posted it makes much more sense. It will be interesting given the notice had been out for almost a year when we had the conversation. I'd assume it would cool the potential for transactions.
 
jryoung said:
He shrugged and said he didn't know, but his investment guy had it dialed.
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Pretty much my experience as well. I figured if they trusted their annuity salesman more than me I should be happy to see them go.

Some sweet karma I just heard of today: Two CPAs at the firm where my clients went once they left me have had their licences suspended. I know this particular firm has been complicit in this type of strategy. I wonder if it's the cause of the suspension as well?
 
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