Court Rulings Add to Uncertainty Over Conservation Tax Break

Conflicting court rulings have heightened uncertainty about a strategy the IRS has relied on to quickly disallow conservation deals it views as abusive tax shelters, creating a circuit split in the regions where many of those transactions occur.

The deals, known as conservation easement donations, involve property owners who give away the development rights for land or buildings for conservation purposes. Donors may claim a deduction for the gift if they meet the requirements of tax code Section 170(h), including that the conservation purpose of the donation is “protected in perpetuity.”

In late 2016, the IRS began requiring ...