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January 22, 2007
Land trusts will notice a new disclosure requirement
for conservation easements when they complete Form 990 Schedule
A for 2006. Part III of Schedule A, entitled “Statements
About Activities” includes
a new line 3(c): “Did the organization receive or hold an
easement for conservation purposes, including easements to preserve
open space, the environment, historic land area or historic structures?
If 'Yes', attach a detailed statement.”
Land
trusts that hold, acquired, or transferred easements should refer
to the instructions for Line 3(c). According to these instructions,
the detailed statement required by the IRS should include the following
information about easements held, acquired, or transferred during
the year:
1. The number of easements held at the beginning
of the year, the total acreage under easement, and the number of
states in which easements are located
2. The number of easements
and the acreage acquired or received during the year
3. The number
of easements “modified,
sold, transferred, released or terminated” during the year,
and the acreage of these easements. Also, the IRS wants to know
the reason for the modification, the recipient’s identity,
and whether the recipient was a charitable organization qualified
to receive the easement.
4. The number of easements in the following
categories:
• Easements on buildings
• Easements that
encumber a golf course
• Easements within or adjacent to residential
developments
• Easement transactions in which the organization
receives a charitable contribution from a party to the transaction
(described in Internal Revenue Bulletin 2004-28, July 12, 2004)
5. Number of easements (and acreage) monitored
during the year
6. Total staff hours devoted to, and expenses
(including staff salaries and legal expenses) incurred in monitoring
and enforcement of easements during the year
7. Identity of easements
on buildings acquired after August 17, 2006, and a statement that
the building meets the definition of a “certified historic structure,” as
defined by IRS Regulation 170(h)(4)(B)
The published 990 instructions
leave some things unclear. What exactly they mean by “within
or adjacent to residential development,” for instance, has
yet to be clarified. LTA plans to communicate
concerns about that vagueness to the IRS and share whatever clarification
they get with the land trust community. We’ll do
our best to keep you updated.
Please contact Pam Foster Felt at 608-251-9131
x11 or pam [at] gatheringwaters.org with additional questions.
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