The IRS has raised its scrutiny with charitable easements.The increase in scrutiny with charitable easements stems from compliance problemswith subordination rights, valuation, and substantiation. Litigation over thesecompliance problems in charitable easements is steady making it more likely theproblems will continue. Recently, the IRS argued easement contracts assigning particularrights to mortgagees did not meet the requirement of a mortgagee’s rights inrelation to the subordination rights of the donee. The valuation issues comeinto play with the requirements for qualified appraisals. Additionally, thevalue of an easement is difficult to determine for a deduction. Failure tocomply with Form 8283 could lead to problems with substantiating the value ofthe easement leading to a disallowance of a tax deduction.
See Karl L. Fava, Conservation Easement Tax Donation Update, Journal of Accountancy May 2013.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
