Standards & Practices
Issue 1 – Tax Appraisals and Easement Valuation
In This Issue
For the premier installment of the S&P E-Bulletin, we decided to tackle one of the tougher issues currently facing land trusts – tax appraisals and easement valuation. Outlined below is an overview of Standard 10 - Tax Benefits - and the associated Practices, some notes from LTA publications (as well as links to helpful LTA material on the subject), and additional Texas-specific commentary.
We hope that this bulletin will broaden knowledge and expertise, expand the discussion of pertinent issues, and help to put into context some of the very real challenges facing land trusts and the further progress of conservation goals in Texas. Special thanks to Jennifer Lorenz, Jim Jeffries, David Braun, and Jeff Francell for input and advice regarding this issue of the S&P E-Bulletin.
Standard 10: Tax Benefits
"The land trust works diligently to see that every charitable gift of land or easements meets federal and state tax law requirements."
Practice 10A: Tax Code Requirements
The land trust notifies (preferably in writing) potential land or easement donors who may claim a federal or state income tax deduction, or state tax credit, that the project must meet the requirements of IRC §170 and the accompanying Treasury Department regulations and/or any other federal or state requirements. The land trust on its own behalf reviews each transaction for consistency with these requirements.
Practice 10B: Appraisals
The land trust informs potential land or easement donors (preferably in writing) of the following: IRC appraisal requirements for a qualified appraisal prepared by a qualified appraiser for gifts of property valued at more than $5,000, including information on the timing of the appraisal; that the donor is responsible for any determination of the value of the donation; that the donor should use a qualified appraiser who follows Uniform Standards of Professional Appraisal Practice; that the land trust will request a copy of the completed appraisal; and that the land trust will not knowingly participate in projects where it has significant concerns about the tax deduction.
Practice 10C: No Assurances on Deductibility or Tax Benefits
The land trust does not make assurances as to whether a particular land or easement donation will be deductible, what monetary value of the gift the Internal Revenue Service (IRS) and/or state will accept, what the resulting tax benefits of the deduction will be, or whether the donor's appraisal is accurate.
Practice 10D: Donee Responsibilities (Forms 8282 and 8283)
The land trust understands and complies with its responsibilities to sign the donor's Appraisal Summary Form 8283 and to file Form 8282 regarding resale of donated property when applicable. The land trust signs Form 8283 only if the information in Section B, Part 1, "Information on Donated Property," and Part 3, "Declaration of Appraiser," is complete. If the land trust believes no gift has been made or the property has not been accurately described, it refuses to the sign the form. If the land trust has significant reservations about the value of the gift, particularly as it may impact the credibility of the land trust, it may seek additional substantiation of value or may disclose its reservations to the donor.
Texas Land Trust Council