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FOR LANDOWNERS · ESTATE PLANNERS · FAMILY-OFFICE STAFF · CPAs ADVISING ON LAND TRANSACTIONS

Conservation easements offer one of the largest charitable deductions in the code — and one of the highest IRS audit rates.

The deduction equals the FMV of the land before the easement minus the FMV after. For a genuine personal easement — family land permanently protected, donated to a qualified land trust, with an honest appraisal — the deduction can be transformational and the conservation outcome is real. For syndicated easements with 5x-10x markup over partnership cost basis, the deduction is a tax-shelter scheme. The IRS knows the difference. This tool estimates the deduction and flags the audit-risk profile before you sign anything.

Before − After
Deduction
50% AGI
Or 100% for farmers
15-yr
Carryforward
Audit
High scrutiny
YOUR EASEMENT
1
Land & purpose
2
Valuation
3
Donor & structure
4
Audit risk profile
5
Estimate & flags
STAGE 1 OF 5

Land & purpose

The deduction requires a qualified conservation purpose: outdoor recreation, natural-habitat protection, open space (including farmland and forest), or historic preservation. Mission must be documented and the easement must be in perpetuity.

Total acres being placed under easement restriction.
Treasury Reg §1.170A-14(d) lists qualified purposes. Open space is the most common; historic preservation has its own subspecialty.
Must be a qualified organization under §170(h)(3) — typically a 501(c)(3) land trust or government agency with conservation as a mission and the capacity to enforce.
The easement deed must restrict the property in perpetuity, and the land trust must have funding, mission, and enforcement capacity. Easements with weak perpetuity language fail IRS qualification.
★ IRS SCRUTINY NOTICE — READ FIRST

Conservation easements are listed in the IRS "Dirty Dozen" of abusive tax schemes.

Syndicated conservation easements — where investors buy partnership units, the partnership donates an easement valued at 5x-10x the contributed capital, and investors get pass-through deductions — are listed transactions under IRS Notice 2017-10. Any deduction over $250,000 from a syndicated transaction requires Form 8886 disclosure with the return. Failure to disclose triggers a $200,000 penalty for individuals (50% of the deduction claimed, max $200K).

The IRS has prevailed in nearly every syndicated-easement case it has litigated since 2017. Tax Court has disallowed deductions, imposed gross-valuation-misstatement penalties (40% of underpayment), and in some cases, criminal referrals followed. If your easement is being marketed to you with a multiplier ratio (e.g., "4-to-1 deduction") or a partnership/LLC syndication structure, you should stop and get independent counsel before signing anything.

STAGE 2 OF 5

Valuation

The deduction equals before-easement FMV minus after-easement FMV. Both numbers must come from a qualified appraisal by an appraiser meeting §170(f)(11) standards. The appraisal is the audit battleground.

"Highest and best use" value before the restriction. If the land is rural and zoned only agricultural, the before value cannot reasonably include speculative residential-development potential without supporting evidence.
$
Value of the land subject to the conservation restrictions. The easement deed determines what's still allowed (typically: continued agricultural use, limited residential, no commercial development).
$
Original purchase price + capitalized improvements. Drives the syndicated-easement red-flag ratio: a deduction more than 2.5x basis raises questions; 5x+ is the prosecution zone.
$
Years the donor has owned the property. Short holding periods (under 12 months) on syndicated transactions are a Tax Court red flag and disqualify long-term-capital-gain treatment for inherited basis questions.
§170(f)(11) requires a "qualified appraiser" with USPAP-compliant methodology. Conservation-specialty appraisers (members of Land Trust Alliance, ASA, AI) are the defensible choice; general residential appraisers are not.
The before-value justification. Strong: documented comparable sales, market study, zoning analysis. Weak: speculative development potential without zoning approval or infrastructure.
STAGE 3 OF 5

Donor & structure

Personal easement (donor owns the land, donates the easement) is the defensible structure. Syndicated easement (investors buy into a partnership that owns the land) is the high-risk structure.

Personal: you own the land. Syndicated: you bought partnership units in an LLC that owns the land. The syndicated structure is where almost all IRS scrutiny lives.
Conservation easement deductions: 50% of AGI (general); 100% of AGI for qualified farmers and ranchers; 15-year carryforward (vs 5 years for non-qualifying easements). Drives how fast the deduction can be used.
$
Federal + state combined. Drives deduction value.
%
"Qualified farmer or rancher" (over 50% of gross income from farming/ranching) gets 100%-of-AGI deduction limit and 25-year carryforward. The most generous version of the deduction.
STAGE 4 OF 5

Audit risk profile

The audit-risk score below is built from the inputs you've already provided. This is not a substitute for tax counsel review — it's a first-pass triage before you commit.

Is this transaction being marketed to you by a promoter / advisor receiving a fee tied to the deduction? Promoter fees over 10% of the deduction are listed-transaction triggers (Notice 2017-10).
Was the deduction multiplier (e.g., "3-to-1" or "4-to-1") marketed to you BEFORE you saw the appraisal? That's the hallmark of a syndicated scheme.
A pre-easement baseline document (photos, maps, condition descriptions) is required to demonstrate the conservation values. Required by Treasury Reg §1.170A-14(g)(5).
The easement deed reserves certain rights to the donor (continued use, limited residential, mineral rights). The IRS scrutinizes "swiss cheese" easements that reserve too much — the conservation purpose must be the dominant restriction.
STAGE 5 OF 5

Estimate & flags

Deduction estimate, multi-year usage projection, audit-risk score, and the disqualifier checks Tax Court applies most often.

HERE — TRY THESE. THEY MAY HELP.

No forms. No funnel. Just the work.

The Institute publishes practitioner reference. No signup, no email capture, no sales call. If your easement is genuine and well-structured, your next call is to an estate planning attorney + qualified appraiser — not us. If the deal you're being shown is a syndicated easement marketed by a promoter, your next call is to independent tax counsel before you sign anything.

Family Office Guide Estate Planning Decoded All free tools
⚠ CONSERVATION EASEMENT IRS-SCRUTINY DISCLAIMER. Conservation easements are among the highest-audit-rate charitable deductions in the Internal Revenue Code. Syndicated conservation easement transactions are listed transactions under IRS Notice 2017-10; any participant claiming a deduction of $250,000 or more must file Form 8886 with their return; failure to disclose triggers a penalty of 75% of the decrease in tax (max $200,000 individual / $50,000 entity). The IRS has prevailed in the vast majority of syndicated-easement cases litigated since 2017, with deductions disallowed in full and 40% gross-valuation-misstatement penalties imposed. Treasury Reg §1.170A-14 governs the substantive requirements; §170(f)(11) governs the qualified appraisal requirement. State conservation easement law and recording requirements vary materially. Do not execute a conservation easement transaction without an estate planning attorney experienced in §170(h) easement design AND a qualified conservation-specialist appraiser AND, for any syndicated structure, an independent second opinion from tax counsel not affiliated with the promoter. Outputs are estimates only and do not constitute appraisal, legal, or tax advice. This is not financial, tax, or legal advice.
WANT THE METHODOLOGY BEHIND THIS TOOL?
This calculator pairs with Family Office Guide and Estate Planning Decoded.
The tool estimates the deduction and flags risk. The guides cover the surrounding architecture — the conservation easement vs bargain sale vs outright donation decision, the §2031(c) estate-tax exclusion, the qualified-appraiser selection, the syndicated-easement avoidance protocol, and how easements fit into the family-land legacy plan.
Methodology references: FO Guide Ch 9 (Philanthropy operating model) and Estate Planning Decoded Ch 7 (Real-estate-driven charitable strategy).
Family Office Guide → Estate Planning Decoded →
⚠ IRS-SCRUTINY DISCLAIMER · READ CAREFULLY

Listed-transaction notice. Conservation easements — especially syndicated conservation easement transactions — are among the highest-audit-rate deductions in the Internal Revenue Code. Notice 2017-10 designates syndicated conservation easement transactions with profit ratios of 2.5x or greater as "listed transactions." Any participant claiming a deduction of $250,000 or more from a listed transaction must file Form 8886 with their return; failure to disclose triggers a penalty of 75% of the decrease in tax shown (capped at $200,000 for individuals / $50,000 for entities) under IRC §6707A. Material advisors face additional penalties under IRC §6707 / §6708.

IRS litigation success rate. The IRS has prevailed in the substantial majority of syndicated conservation easement cases litigated in Tax Court since Notice 2017-10. Deductions have been disallowed in full; 40% gross-valuation-misstatement penalties under IRC §6662(h) have been imposed; in some cases, criminal referrals have followed promoter conduct.

Educational and informational purposes only. This calculator and any output it produces are intended solely for general educational and decision-support purposes and do not constitute investment, tax, legal, accounting, or appraisal advice. Treasury Reg §1.170A-14 governs the substantive easement requirements; §170(f)(11) and Treasury Reg §1.170A-17 govern the qualified appraisal requirement. State conservation easement law and recording requirements vary materially.

Required professional team. Do not execute a conservation easement transaction without (a) an estate planning attorney experienced in §170(h) easement design, (b) a qualified conservation-specialty appraiser meeting §170(f)(11) requirements, and (c) for any syndicated or promoter-arranged structure, an independent second-opinion-of-counsel from tax counsel not affiliated with the promoter.

Co-branded versions: If a professional advisor's name and contact information appear on this tool, that advisor has elected to make the tool available to clients as a courtesy. The disclaimer above applies regardless of co-branding. This is not financial, tax, or legal advice.

Educational references and tools — not legal, tax, accounting, or investment advice, and not a recommendation to buy or sell any security. Consult a qualified professional about your specific situation. © 2026 The Baratelli Institute.