Conservation Easements: The Federal Tax Rules And Special Considerations Applicable To Syndicated Transactions

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Updike, Bradford
Mick, Bryan
Issue Date
2016
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FIRST PARAGRAPH(S)|Conservation easements are a fairly recent approach to land conservation. As government acquisitions and regulatory restrictions on land use have become prohibitively invasive, costly, and ineffective, governments, such as the United States, have looked to conservation easements as a potentially effective and less expensive conservation method than government ownership and regulation. The "use of conservation easements began to gain steam by the 1980s, and by the 1990s, exploded on the scene." Today, several million acres of conservation-sensitive land have been protected with such easements. Coincidentally, the income tax benefits associated with these easements have included several billion dollars in federal income tax deductions. While the vast majority of conservation easement transactions involve private landowners, a cottage sub-industry evolved within the financial services market over the past decade that involves companies that syndicate real estate investment opportunities to retail investors that utilize conservation as a possible program investment purpose. These securities offerings are premised on a real estate investment transaction that involves the acquisition by an investor group of an interest in environmental sensitive real estate that is also developable or marketable as commercial real estate. This transaction is further supported with, in many cases, significant federal income tax deductions that apply to conservation easements and that may be allocated to the investor partners if a conservation purpose is ultimately adopted by the partners...
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Creighton University School of Law
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