Singing a New Song

In a recent opinion, a federal court covering Texas concluded that it was "common sense" that land use restrictions designed to protect the golden-cheeked warbler, an endangered species which only lives in Texas, would need some flexibility over time.

Bosque Canyon Ranch is a residential development, and the partners of the ranch each own a five-acre lot with a home site. Thousands of acres of land surrounding these lots are preserved for the golden cheeked warbler and other species as spelled out in a conservation easement. The lot owners could move their home site within their lot as long as the home did not exceed the maximum allowable size and as long as conservationists approved the move along with other important limits to protect the land and animals.

The IRS argued that this level of flexibility would not provide adequate protection for the golden-cheeked warbler. Since the home sites could move, nobody would know the exact location of the warbler habitat until much later. The tax court agreed with the IRS analysis, denied Bosque Canyon Ranch's claimed $15.9 million tax deduction and imposed a hefty fine.

The appeals court disagreed, noting that the land trust would have to approve any plans to move a home site and the land trust would not have to approve any plan that threatened the golden-cheeked warbler. The court said it shouldn't be enforcing "hyper-technical requirements" or "imposing ambiguous and subjective standards" for documentation.

The tax deduction for conservation easements is an important part of the tax code and significantly benefits the public and endangered species like the golden-cheeked warbler. This new ruling supports those benefits.