Chapter 5, cont.

Links

Extending the discussion of Chapter 5:

1. In May, 2003, the Washington Post published a series of articles that raised a serious issue for The Nature Conservancy, the world’s largest environmental organization: accountability. The need for accountability has become a critical need for all nonprofit organization and specifically, land trusts. Review some of the articles in this Washington Post series and subsequent action by TNC and U.S. Congress
(http://www.washingtonpost.com/wp-dyn/nation/specials/natureconservancy/), and write a one-page review characterizing this issue and reviewing some of the actions taken in response to this expose.

2. In addition to federal and state income and estate tax deductions that can be claimed for donations or bargain sales of conservation easements to a land trust or government agency, several states, including Virginia and Colorado, have additional state tax credits for the donation of such easements. Find reference to their programs on the Internet.
- In a table, compare their general policies in terms of allowable credits, limitations on credits, transfer of credits, and carryover to future tax years.
- In a second table compare the tax benefits for the following hypothetical easement donation:

3. The appraised value of a 100-acre property with full development is $250,000 and appraised value with conservation easement (limited development allowed) is $150,000. What is the value of the conservation easement?

4. The land owner/tax payer donating the easement has a $10,000 per year state tax liability and does not transfer the credits.

5. In Virginia, conservation easement tax credits can be transferred or sold to other state taxpayers who can then claim the tax credit on their state tax return. This extends the program by providing an incentive for landowners with limited tax liability against which they can claim the credit, such as those with limited taxable income or those absentee landowners who live in another state. The credits are sold for less than full value (usually 80-90 cents on the dollar), allowing the buyer to claim the full tax credit (like buying a dollar for 80-90 cents) and providing an immediate cash benefit to the landowner.
- If the easement donator in question 10 has very limited income in Virginia and no state tax liability, what financial benefits can she get if she can sell the tax credits in equal shares to ten different buyers at 85 cents per dollar?
- What net financial benefits do each of the ten buyers receive if each has a state tax liability of $5000?
- What is the impact on state tax revenues? What does the state get for this reduction in revenues?