Thanks to everyone who sent in Richard Rubin's WSJ story on the IRS going after courses taking deductions for conservation areas that may not exist.
As we know, some courses genuinely provide an environmental safe haven for critters and greenery thanks to the native design philosophy and sensible maintenance practices. It sounds from the story as if the IRS is looking to target those serving a less vital purpose, though it's hard to tell from one story. Especially since the story is accompanied by a photo from the IRS's expert showing Canada geese on a course questioned for its conservation easement deductions.
Regarding the main easement break, Rubin writes:
Known as the conservation-easement tax break, the rule lets people claim a charitable deduction for giving away the right to develop land they still own and can use. The measure has encouraged protection of millions of acres of pristine land. It has also spawned litigation requiring judges to wade into dueling testimony from ecologists and appraisers.
Judges have, among other things, lowered the value of preserving the historic terra cotta facade of the Ritz-Carlton in New Orleans and told a Virginia landowner that building 30 houses instead of 62 didn’t count as open-space preservation. One case, though, did permit a Michigan couple to claim tax breaks for protecting a famous bald eagle roosting spot.
The cases involve few people and plenty of money. In 2012, the most recent year for which data are available, 1,114 taxpayers took an average deduction of $872,250 based on the rule, according to the IRS, for a total of slightly less than $1 billion. Numbers like that can pique an auditor’s interest.