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Highlights of Schedule D Conservation Easement Questions

Part II of Schedule D of the IRS Form 990 includes nine questions on conservation easements.

Even if you aren’t required to file a full Form 990, we suggest you look at it. The IRS is asking many of the same questions in audits – and you should be prepared to answer them!

Part IV, Line 7 of the core form asks:

Did the organization receive or hold a conservation easement, including easements to preserve open space, the environment, historic land areas or historic structures? If “Yes,” complete Schedule D, Part II.

Schedule D asks a number of questions, including:

  • The purpose(s) of conservation easements held by the organization
  • Total number of conservation easements
  • Total acreage subject to conservation easements
  • Number of conservation easements on a certified historic structure
  • Number of conservation easements on historic structures acquired after August 17, 2006 that are not listed on the National Register
  • Number of conservation easements modified, transferred, released, extinguished or terminated by the organization during the taxable year
  • Number of states in which the organization holds a conservation easement
  • Whether the organization has a written policy regarding the periodic monitoring, inspection, handling of violations and enforcement of the conservation easements it holds
  • Number of staff or volunteer hours devoted to monitoring, inspecting and enforcing easements during the year
  • Amount of expenses incurred in monitoring, inspecting and enforcing easements during the year
  • Whether each easement acquired after August 17, 2006 satisfies the requirements of 170(h)(4)(B)(i) and (ii) (these are the special rules with respect to easements on buildings in registered historic districts)
  • How the organization reports conservation easements in its revenue and expense statements and balance sheet

Schedule D: More Information

  • Reporting is limited to conservation easements and other interests in real property that have attributes similar to a conservation easement and are established for the purpose of conservation and preservation (for example, certain restrictive covenants and equitable servitudes (not all easements, such as utility easements)
  • Reporting of acreage under easement at end of year is limited to easements eligible for a section 170 deduction
  • Asks for, if applicable, the text of the footnote to the organization’s financial statements that describes the organization’s accounting for conservation easements

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July 17: The House just voted 277-130 to pass the charities package! 56 Democrats joined their Republican colleagues to support charitable giving incentives, including the enhanced easement incentive - the second-highest number of defections after the research and development tax credit. Several others spoke on the floor in support of the conservation easement incentive, and other favorable charitable incentives. Thank you to organizations like Ducks Unlimited, CSF and others that reached out to Congressional offices over the last few days or alerted their membership of this important vote. Now, we pivot to the Senate.
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