Offering a Mulligan on Conservation Easement Tax Law: Ensuring Public Access on Conserved Land

Abstract

Conservation easements have long served as a private land conservation tool by allowing landowners to keep their land while forgoing certain rights, like the right to develop their land. Congress created federal income tax deductions for conservation easements to provide an income tax benefit to private landowners with conservation easements meeting Internal Revenue Code requirements. These deductions benefit the government, the public, and private landowners by encouraging conservation easements to keep land beautiful and wild. Large real estate investors are misusing this tool to gain hefty tax deductions on outdoor recreational areas like golf courses and resorts with limited public access. The Internal Revenue Code and the relevant Treasury regulations controlling conservation easement deductions require recreational areas be usable by the general public but fail to explain what constitutes general public access. This ambiguity creates uncertainty over whether a deduction is appropriate for recreational areas that may restrict public access physically or financially. Modifying the relevant regulations is essential to resolve such ambiguity and to ensure deductions for conservation easements serve their intended purpose of encouraging conservation and the preservation of American heritage. This Article offers a mulligan on the Treasury regulations to fulfill the hope of conservation by: (1) defining “general public” as “public at large,” (2) preventing limitations on access unless a limitation is for the health and safety of the general public, and (3) including an example of a recreational property where access is limited with an interpretation of whether the property qualifies for a deduction.