Maine Land Conservation Law E-Bulletin September 2010

 

In this Issue:

• Introduction
• LMF Bond – November Vote
• Case Law Update: Stewardship Contributions

Introduction

Welcome to this issue of the Maine Land Conservation Law E-Bulletin!  I send E-Bulletins 3 or 4 times per year to provide updates and analyses on legal and policy matters respecting Maine land conservation.  I do my best to keep my messages brief, timely, and useful to conservation-minded landowners, as well as land trust professionals and volunteers.  At the same time, no one should rely on these E-Bulletins as legal advice, and I encourage you to consult a qualified attorney for advice on any particular situation.

If you find this free E-Bulletin to be valuable and interesting, please forward it to a friend or colleague.  Subscriptions remain free, and I respect my subscribers’ privacy.  Anyone who would like to receive this E-Bulletin or the Maine Nonprofit Law E-Bulletin can e-mail me at rob@roblevin.net.  If you’d like to be removed from my list, simply drop me a line at that same address.

LMF Bond – November Vote

On Election Day, voters will have the opportunity to re-affirm their commitment to protecting Maine’s special natural areas.  A small but much-needed infusion of funding for land conservation is on the ballot as a bond referendum.  Question 3 would provide $7.5 million to the Land for Maine’s Future program.

In addition to supporting the LMF program, Question 3 will also provide $1.75 million for the Working Waterfront Pilot Project, an initiative to protect important commercial fishing parcels.  Another $500,000 would go to Maine’s State Park system.

On four previous occasions since 1987, Maine voters have approved LMF bond measures by wide margins.  But given this year’s political climate, land conservation supporters should take nothing for granted, and actively spread the word about the importance of this bond measure.

Case Law Update: Stewardship Contributions

Under contract with the Land Trust Alliance, I research and compile a comprehensive database of land conservation-related court opinions.  The current edition of Land Conservation Case Law Summaries includes 196 cases and is available to Alliance members at http://learningcenter.lta.org.  Occasionally, I discuss particularly important or interesting cases in this E-Bulletin.

Two recent U.S. Tax Court cases suggest that certain stewardship contributions that accompany conservation easement donations may not be eligible for federal income tax charitable deductions.  Both cases, Scheidelman v. Commissioner, T.C. Memo 2010-151 (U.S.T.C. 2010), and Kaufman v. Commissioner, 134 T.C. 9 (U.S.T.C. 2010), involved historic preservation façade easements granted to the same organization.  The organization had a written policy requiring a stewardship contribution equal to 10% of the appraised value of the conservation easement.  The IRS challenged the deductibility of the stewardship contributions, claiming that because they were required by the easement holder, and because the donors received something of value in exchange for the payments, they were not deductible gifts.  In Kaufman, the Tax Court declined to rule either way on summary judgment, and preserved the issue for trial.  But in Scheidelman, the Court held that the stewardship payment was not a deductible contribution because the taxpayer failed to provide evidence that she had not received anything of value in exchange for the payment.  The Tax Court’s analysis here is not particularly sophisticated or useful, however, as it faults the taxpayer for failing to prove a negative.  Furthermore, the opinion does not delve into whether all required stewardship contributions are non-deductible, or only because the land trust in this transaction had performed considerable legal work for the grantor by undertaking the subordination of an existing mortgage.

In any event, these two cases should give land trusts and landowners pause in assuming that a required stewardship payment is deductible.  Land trusts that do require such contributions might consider changing their policies so as to only request or encourage a stewardship contribution.  There is no right answer here.  A request might result in fewer contributions being made.  The tradeoff would be a more satisfied donor, insofar as s/he could more safely assume that the contribution is deductible.

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              CIRCULAR 230 DISCLOSURE: Any federal tax advice contained in this communication or attachment is not to be used for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing or recommending any transaction or matter addressed in this communication.

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