A Tax Break Under Fire - And Getting Bigger
Conservation easements have a reputation problem. A few bad actors spoiled it for everyone.
Here is the deal. A conservation easement is a legal agreement where a landowner gives up the right to develop their property - no subdivisions, no strip malls - in exchange for a tax deduction equal to the drop in the land's value. It is meant to reward people who want to protect open space, farmland, or wildlife habitat forever.
The IRS started paying close attention after groups of investors, known as syndicated conservation easement deals, figured out a trick. They would buy land, get a wildly high appraisal for the development rights they gave up, then claim a deduction many times what they actually paid. One Alabama partnership claimed a $41.6 million deduction. The U.S. Tax Court cut it to $800,000.
In 2022, Congress stepped in and placed a limit on how much value can be claimed. That slowed down the worst abuses. In May, the agency offered a settlement to try to close them out faster. Several states - such as New York, Colorado, and Georgia - have likewise broadened their conservation easement programs.
The Line Between Abuse and Protecting the Land
"I run into people who say, 'Wow, conservation easements are bad things. They're abusive.' No, they're not. They are for a small set of people and a small set of people that are getting sucked into this by bad actors," said Keith Fountain, a Florida lawyer who advises landowners on easements.
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Fountain's clients are not speculators flipping properties. "My clients are people who own land and love the land, and the conservation easements provide a way to get some financial benefit and to keep and own and manage that land for the right purposes forever," he said.
That is exactly the kind of deal Ted Turner used.
Carolyn Schenck spent years policing the bad actors as the IRS national fraud counsel. She left the agency in 2025 to join law firm Caplin & Drysdale, but she still believes in the program. "The fact that some taxpayers abuse the rules, I don't think means that the underlying policy lacks value in any way," Schenck said.
Steve Small helped write the original tax code for conservation easements back in the early 1980s while he worked at the IRS. He points out that the agency has a hard time seeing what is actually being saved. "What does the IRS get when you take an easement deduction? A lot of typed paper," Small said. "They don't get any feel at all for the beauty of the project or the views across the open space."
What This Means for Landowners and Their Money
So where does that leave someone who actually wants to preserve their property?
The honest deals are in a better spot than they were a decade ago. The 2022 limits made it harder for investor syndicates to game the system. The IRS is focused on rooting out the remaining bad cases.
And Small sees the risk dropping for genuine landowners. "Frankly, I think if you do a good honest conservation easement project today, the risk is lower than it was 10 years ago," he said.
Congress is also looking ahead. The farm bill proposals include a new program that would pay landowners to keep forests standing instead of selling them for development. That is a different approach - cash payments instead of tax deductions - but it shows the same idea is gaining momentum.
For landowners who love their property and want to keep it intact, the math may finally make sense again. The key is working with honest appraisers and lawyers who know the rules. The IRS still thinks properly supported easements are not a loophole, as Schenck put it. They are a tool.
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