Conservation easement tax treatment (WSJ)

Here's how it works: A landowner typically donates a conservation easement to a land trust, a type of non-profit organization that helps put together the easement and monitors its restrictions over time. The value of the donation for income-tax purposes generally is the difference between the land's unrestricted value and its new value with limited development or usage rights. The law is designed to encourage easement donations by allowing larger tax deductions. Landowners can now deduct the value of a donation up to 50% of their adjusted gross income per year, up from the previous ceiling of 30%. That means if your adjusted gross income is $100,000, you are now eligible for as much as a $50,000 tax deduction a year, instead of $30,000. And if your income is too low to deduct the full amount of your gift in one year, you can now carry forward the deduction for 15 additional years, up from five years previously. Property held in family limited partnerships, limited liability companies and some types of corporations may also be able to take advantage of the increased deduction limits.

For example, the PA farm: Present market value = $900,000. Value less right to develop = $700,000. Relinquished value =$200,000. $200,000 is deductible over as much as 15 years.