Form 8283 Instructions Require New Attachments
The New Requirements
In 2006, the Internal Revenue Service published a new Form 8283 and new instructions that require additional information from conservation easement donors. Recent experience suggests that the IRS takes these questions very seriously and a sufficiently detailed "supplemental statement" ought to be 5-10 pages long. IRS officials also emphasize that an address is not an adequate "description of donated property" for form 8283 and have sugested attaching the entire recorded easement and baseline report.
The new instructions require that conservation easement donors attach to their 8283 a statement that:
- Identifies the conservation purposes furthered by your donation,
- Shows, if before and after valuation is used, the far market value of the underlying property before and after the gift;
- States whether you made the donation in order to get a permit or other approval from a local or other governing authority and whether the donation was required by a contract, and
- If you or a related person has any interest in other property nearby, describes that interest.
The new instructions also state:
"The donee must be a qualified organization as defined in section 170(h)(3) and must have the resources to be able to monitor and enforce the conservation easement.... To enable the organization to do this, you [the donor] must give it [the donee organization] documents, such as maps and photographs, that establish the condition of the property at the time of the gift."
How Land Trusts Can Help
Land trusts can help by making sure that their donors know about the new forms and instructions, and by helping donors with a statement they will have to provide the IRS that "identifies the conservation purposes furthered by your donation." That should be easily derived from the "purposes" and "recitals" (whereas clauses) of the easement. The IRS is not looking for "conservation" as Webster defines it -- they are looking to see that the easement serves one or more of the specific "conservation purposes" defined in IRC 170(h)(4).
It is important, too, that you notify appraisers who work with your donors of the new requirements, as they will have to provide the donor a statement that "shows, if before and after valuation is used, the Fair Market Value of the underlying property before and after the gift." The new instructions also require the appraiser to state in their appraisal "the method of valuation (such as the income approach or the market data approach) and the specific basis for the valuation (such as comparable sales transactions)".
Document Actions
