Treasury Regulation § 1.170A-14
Qualified Conservation Contributions.
§ 1.170A-14 Qualified conservation contributions.
(a) Qualified conservation contributions. A deduction under section
170 is generally not allowed for a charitable contribution of any
interest in property that consists of less than the donor's entire
interest in the property other than certain transfers in trust (see
Sec. 1.170A-6 relating to charitable contributions in trust and
Sec. 1.170A-7 relating to contributions not in trust of partial
interests in property). However, a deduction may be allowed under
section 170(f)(3)(B)(iii) for the value of a qualified conservation
contribution if the requirements of this section are met. A qualified
conservation contribution is the contribution of a qualified real
property interest to a qualified organization exclusively for
conservation purposes. To be eligible for a deduction under this
section, the conservation purpose must be protected in perpetuity.
(b) Qualified real property interest--(1) Entire interest of donor
other than qualified mineral interest. (i) The entire interest of the
donor other than a qualified mineral interest is a qualified real
property interest. A qualified mineral interest is the donor's interest
in subsurface oil, gas, or other minerals and the right of access to
such minerals.
(ii) A real property interest shall not be treated as an entire
interest other than a qualified mineral interest by reason of section 170(h)(2)(A) and this paragraph (b)(1) if the property in which the donor's interest exists was divided prior to the contribution in order
to enable the donor to retain control of more than a qualified mineral
interest or to reduce the real property interest donated. See Treasury
regulations Sec. 1.170A-7(a)(2)(i). An entire interest in real property
may consist of an undivided interest in the property. But see section 170(h)(5)(A) and the
regulations thereunder (relating to the requirement that the
conservation purpose which is the subject of the donation must be
protected in perpetuity). Minor interests, such as rights-of-way, that
will not interfere with the conservation purposes of the donation, may
be transferred prior to the conservation contribution without affecting
the treatment of a property interest as a qualified real property
interest under this paragraph (b)(1).
(2) Perpetual conservation restriction. A "perpetual conservation
restriction" is a qualified real property interest. A "perpetual
conservation restriction" is a restriction granted in perpetuity on the
use which may be made of real property--including, an easement or other
interest in real property that under state law has attributes similar to
an easement (e.g., a restrictive covenant or equitable servitude). For
purposes of this section, the terms easement, conservation restriction,
and perpetual conservation restriction have the same meaning. The
definition of perpetual conservation restriction under this paragraph
(b)(2) is not intended to preclude the deductibility of a donation of
affirmative rights to use a land or water area under Sec. 1.170A-
13(d)(2). Any rights reserved by the donor in the donation of a
perpetual conservation restriction must conform to the requirements of
this section. See e.g., paragraph (d)(4)(ii), (d)(5)(i), (e)(3), and
(g)(4) of this section.
(c) Qualified organization--(1) Eligible donee. To be considered an
eligible donee under this section, an organization must be a qualified
organization, have a commitment to protect the conservation purposes of
the donation, and have the resources to enforce the restrictions. A
conservation group organized or operated primarily or substantially for
one of the conservation purposes specified in section 170(h)(4)(A) will be considered to have the commitment required by the preceding sentence.
A qualified organization need not set aside funds to enforce the
restrictions that are the subject of the contribution. For purposes of
this section, the term qualified organization means:
(i) A governmental unit described in section 170(b)(1)(A)(v);
(ii) An organization described in section 170(b)(1)(A)(vi);
(iii) A charitable organization described in section 501(c)(3) that
meets the public support test of section 509(a)(2);
(iv) A charitable organization described in section 501(c)(3) that
meets the requirements of section 509(a)(3) and is controlled by an
organization described in paragraphs (c)(1) (i), (ii), or (iii) of this
section.
(2) Transfers by donee. A deduction shall be allowed for a
contribution under this section only if in the instrument of conveyance
the donor prohibits the donee from subsequently transferring the
easement (or, in the case of a remainder interest or the reservation of
a qualified mineral interest, the property), whether or not for
consideration, unless the donee organization, as a condition of the
subsequent transfer, requires that the conservation purposes which the
contribution was originally intended to advance continue to be carried
out. Moreover, subsequent transfers must be restricted to organizations
qualifying, at the time of the subsequent transfer, as an eligible donee
under paragraph (c)(1) of this section. When a later unexpected change
in the conditions surrounding the property that is the subject of a
donation under paragraph (b)(1), (2), or (3) of this section makes
impossible or impractical the continued use of the property for
conservation purposes, the requirement of this paragraph will be met if
the property is sold or exchanged and any proceeds are used by the donee
organization in a manner consistent with the conservation purposes of
the original contribution. In the case of a donation under paragraph
(b)(3) of this section to which the preceding sentence applies, see also
paragraph (g)(5)(ii) of this section.
(d) Conservation purposes--(1) In general. For purposes of section
170(h) and this section, the term conservation purposes means--
(i) The preservation of land areas for outdoor recreation by, or the
education of, the general public, within the meaning of paragraph (d)(2)
of this section,
(ii) The protection of a relatively natural habitat of fish,
wildlife, or plants, or similar ecosystem, within the meaning of
paragraph (d)(3) of this section,
(iii) The preservation of certain open space (including farmland and
forest land) within the meaning of paragraph (d)(4) of this section, or
(iv) The preservation of a historically important land area or a
certified historic structure, within the meaning of paragraph (d)(5) of
this section.
(2) Recreation or education--(i) In general. The donation of a
qualified real property interest to preserve land areas for the outdoor
recreation of the general public or for the education of the general
public will meet the conservation purposes test of this section. Thus,
conservation purposes would include, for example, the preservation of a
water area for the use of the public for boating or fishing, or a nature
or hiking trail for the use of the public.
(ii) Access. The preservation of land areas for recreation or
education will not meet the test of this section unless the recreation
or education is for the substantial and regular use of the general
public.
(3) Protection of environmental system--(i) In general. The donation
of a qualified real property interest to protect a significant
relatively natural habitat in which a fish, wildlife, or plant
community, or similar ecosystem normally lives will meet the
conservation purposes test of this section. The fact that the habitat or
environment has been altered to some extent by human activity will not
result in a deduction being denied under this section if the fish,
wildlife, or plants continue to exist there in a relatively natural
state. For example, the preservation of a lake formed by a man-made dam
or a salt pond formed by a man-made dike would meet the conservation
purposes test if the lake or pond were a nature feeding area for a
wildlife community that included rare, endangered, or threatened native
species.
(ii) Significant habitat or ecosystem. Significant habitats and
ecosystems include, but are not limited to, habitats for rare,
endangered, or threatened species of animal, fish, or plants; natural
areas that represent high quality examples of a terrestrial community or
aquatic community, such as islands that are undeveloped or not intensely
developed where the coastal ecosystem is relatively intact; and natural
areas which are included in, or which contribute to, the ecological
viability of a local, state, or national park, nature preserve, wildlife
refuge, wilderness area, or other similar conservation area.
(iii) Access. Limitations on public access to property that is the
subject of a donation under this paragraph (d)(3) shall not render the
donation nondeductible. For example, a restriction on all public access
to the habitat of a threatened native animal species protected by a
donation under this paragraph (d)(3) would not cause the donation to be
nondeductible.
(4) Preservation of open space--(i) In general. The donation of a qualified real property interest to preserve open space (including
farmland and forest land) will meet the conservation purposes test of
this section if such preservation is--
(A) Pursuant to a clearly delineated Federal, state, or local
governmental conservation policy and will yield a significant public
benefit, or
(B) For the scenic enjoyment of the general public and will yield a
significant public benefit.
An open space easement donated on or after December 18, 1980, must meet
the requirements of section 170(h) in order to be deductible.
(ii) Scenic enjoyment--(A) Factors. A contribution made for the preservation of open space may be for the scenic enjoyment of the
general public. Preservation of land may be for the scenic enjoyment of
the general public if development of the property would impair the
scenic character of the local rural or urban landscape or would
interfere with a scenic panorama that can be enjoyed from a park, nature
preserve, road, waterbody, trail, or historic structure or land area,
and such area or transportation way is open to, or utilized by, the
public. "Scenic enjoyment" will be evaluated by considering all
pertinent facts and circumstances germane to the contribution. Regional
variations in topography, geology, biology, and cultural and economic
conditions require flexibility in the application of this test, but do
not lessen the burden on the taxpayer to demonstrate the scenic
characteristics of a donation under this paragraph. The application of a
particular objective factor to help define a view as scenic in one
setting may in fact be entirely inappropriate in another setting. Among
the factors to be considered are:
(1) The compatibility of the land use with other land in the
vicinity;
(2) The degree of contrast and variety provided by the visual scene;
(3) The openness of the land (which would be a more significant
factor in an urban or densely populated setting or in a heavily wooded
area);
(4) Relief from urban closeness;
(5) The harmonious variety of shapes and textures;
(6) The degree to which the land use maintains the scale and
character of the urban landscape to preserve open space, visual
enjoyment, and sunlight for the surrounding area;
(7) The consistency of the proposed scenic view with a methodical
state scenic identification program, such as a state landscape
inventory; and
(8) The consistency of the proposed scenic view with a regional or
local landscape inventory made pursuant to a sufficiently rigorous
review process, especially if the donation is endorsed by an appropriate
state or local governmental agency.
(B) Access. To satisfy the requirement of scenic enjoyment by the
general public, visual (rather than physical) access to or across the
property by the general public is sufficient. Under the terms of an open
space easement on scenic property, the entire property need not be
visible to the public for a donation to qualify under this section,
although the public benefit from the donation may be insufficient to
qualify for a deduction if only a small portion of the property is
visible to the public.
(iii) Governmental conservation policy--(A) In general. The
requirement that the preservation of open space be pursuant to a clearly
delineated Federal, state, or local governmental policy is intended to
protect the types of property identified by representatives of the
general public as worthy of preservation or conservation. A general
declaration of conservation goals by a single official or legislative
body is not sufficient. However, a governmental conservation policy need
not be a certification program that identifies particular lots or small
parcels of individually owned property. This requirement will be met by
donations that further a specific, identified conservation project, such
as the preservation of land within a state or local landmark district
that is locally recognized as being significant to that district; the
preservation of a wild or scenic river, the preservation of farmland
pursuant to a state program for flood prevention and control; or the
protection of the scenic, ecological, or historic character of land that
is contiguous to, or an integral part of, the surroundings of existing
recreation or conservation sites. For example, the donation of a
perpetual conservation restriction to a qualified organization pursuant
to a formal resolution or certification by a local governmental agency
established under state law specifically identifying the subject
property as worthy of protection for conservation purposes will meet the
requirement of this paragraph. A program need not be funded to satisfy
this requirement, but the program must involve a significant commitment
by the government with respect to the conservation project. For example,
a governmental program according preferential tax assessment or
preferential zoning for certain property deemed worthy of protection for
conservation purposes would constitute a significant commitment by the
government.
(B) Effect of acceptance by governmental agency. Acceptance of an
easement by an agency of the Federal Government or by an agency of a
state or local government (or by a commission, authority, or similar
body duly constituted by the state or local government and acting on
behalf of the state or local government) tends to establish the
requisite clearly delineated governmental policy, although such
acceptance, without more, is not sufficient. The more rigorous the
review process by the governmental agency, the more the acceptance of
the easement tends to establish the requisite clearly delineated governmental policy. For
example, in a state where the legislature has established an
Environmental Trust to accept gifts to the state which meet certain
conservation purposes and to submit the gifts to a review that requires
the approval of the state's highest officials, acceptance of a gift by
the Trust tends to establish the requisite clearly delineated
governmental policy. However, if the Trust merely accepts such gifts
without a review process, the requisite clearly delineated governmental
policy is not established.
(C) Access. A limitation on public access to property subject to a
donation under this paragraph (d)(4)(iii) shall not render the deduction
nondeductible unless the conservation purpose of the donation would be
undermined or frustrated without public access. For example, a donation
pursuant to a governmental policy to protect the scenic character of
land near a river requires visual access to the same extent as would a
donation under paragraph (d)(4)(ii) of this section.
(iv) Significant public benefit-- (A) Factors. All contributions made for the preservation of open space must yield a significant public
benefit. Public benefit will be evaluated by considering all pertinent
facts and circumstances germane to the contribution. Factors germane to
the evaluation of public benefit from one contribution may be irrelevant
in determining public benefit from another contribution. No single
factor will necessarily be determinative. Among the factors to be
considered are:
(1) The uniqueness of the property to the area;
(2) The intensity of land development in the vicinity of the
property (both existing development and foreseeable trends of
development);
(3) The consistency of the proposed open space use with public
programs (whether Federal, state or local) for conservation in the
region, including programs for outdoor recreation, irrigation or water
supply protection, water quality maintenance or enhancement, flood
prevention and control, erosion control, shoreline protection, and
protection of land areas included in, or related to, a government
approved master plan or land management area;
(4) The consistency of the proposed open space use with existing
private conservation programs in the area, as evidenced by other land,
protected by easement or fee ownership by organizations referred to in
Sec. 1.170A-14(c)(1), in close proximity to the property;
(5) The likelihood that development of the property would lead to or
contribute to degradation of the scenic, natural, or historic character
of the area;
(6) The opportunity for the general public to use the property or to
appreciate its scenic values;
(7) The importance of the property in preserving a local or regional
landscape or resource that attracts tourism or commerce to the area;
(8) The likelihood that the donee will acquire equally desirable and
valuable substitute property or property rights;
(9) The cost to the donee of enforcing the terms of the conservation
restriction;
(10) The population density in the area of the property; and
(11) The consistency of the proposed open space use with a
legislatively mandated program identifying particular parcels of land
for future protection.
(B) Illustrations. The preservation of an ordinary tract of land
would not in and of itself yield a significant public benefit, but the
preservation of ordinary land areas in conjunction with other factors
that demonstrate significant public benefit or the preservation of a
unique land area for public employment would yield a significant public
benefit. For example, the preservation of a vacant downtown lot would
not by itself yield a significant public benefit, but the preservation
of the downtown lot as a public garden would, absent countervailing
factors, yield a significant public benefit. The following are other
examples of contributions which would, absent countervailing factors,
yield a significant public benefit: The preservation of farmland
pursuant to a state program for flood prevention and control; the preservation of a unique natural land formation for the enjoyment of the general public; the preservation of
woodland along a public highway pursuant to a government program to
preserve the appearance of the area so as to maintain the scenic view
from the highway; and the preservation of a stretch of undeveloped
property located between a public highway and the ocean in order to
maintain the scenic ocean view from the highway.
(v) Limitation. A deduction will not be allowed for the preservation
of open space under section 170(h)(4)(A)(iii), if the terms of the easement permit a degree of intrusion or future development that would
interfere with the essential scenic quality of the land or with the
governmental conservation policy that is being furthered by the
donation. See Sec. 1.170A-14(e)(2) for rules relating to inconsistent
use.
(vi) Relationship of requirements--(A) Clearly delineated
governmental policy and significant public benefit. Although the
requirements of "clearly delineated governmental policy" and
"significant public benefit" must be met independently, for purposes
of this section the two requirements may also be related. The more
specific the governmental policy with respect to the particular site to
be protected, the more likely the governmental decision, by itself, will
tend to establish the significant public benefit associated with the
donation. For example, while a statute in State X permitting
preferential assessment for farmland is, by definition, governmental
policy, it is distinguishable from a state statute, accompanied by
appropriations, naming the X River as a valuable resource and
articulating the legislative policy that the X River and the relatively
natural quality of its surrounding be protected. On these facts, an open
space easement on farmland in State X would have to demonstrate
additional factors to establish "significant public benefit." The
specificity of the legislative mandate to protect the X River, however,
would by itself tend to establish the significant public benefit
associated with an open space easement on land fronting the X River.
(B) Scenic enjoyment and significant public benefit. With respect to
the relationship between the requirements of "scenic enjoyment" and
"significant public benefit," since the degrees of scenic enjoyment
offered by a variety of open space easements are subjective and not as
easily delineated as are increasingly specific levels of governmental
policy, the significant public benefit of preserving a scenic view must
be independently established in all cases.
(C) Donations may satisfy more than one test. In some cases, open
space easements may be both for scenic enjoyment and pursuant to a
clearly delineated governmental policy. For example, the preservation of
a particular scenic view identified as part of a scenic landscape
inventory by a rigorous governmental review process will meet the tests
of both paragraphs (d)(4)(i)(A) and (d)(4)(i)(B) of this section.
(5) Historic preservation--(i) In general. The donation of a
qualified real property interest to preserve an historically important
land area or a certified historic structure will meet the conservation
purposes test of this section. When restrictions to preserve a building
or land area within a registered historic district permit future
development on the site, a deduction will be allowed under this section
only if the terms of the restrictions require that such development
conform with appropriate local, state, or Federal standards for
construction or rehabilitation within the district. See also,
Sec. 1.170A-14(h)(3)(ii).
(ii) Historically important land area. The term historically
important land area includes:
(A) An independently significant land area including any related
historic resources (for example, an archaeological site or a Civil War
battlefield with related monuments, bridges, cannons, or houses) that
meets the National Register Criteria for Evaluation in 36 CFR 60.4 (Pub.
L. 89-665, 80 Stat. 915);
(B) Any land area within a registered historic district including
any buildings on the land area that can reasonably be considered as
contributing to the significance of the district; and
(C) Any land area (including related historic resources) adjacent to
a property listed individually in the National Register of Historic
Places (but not within a registered historic district) in a case where
the physical or environmental features of the land area contribute to
the historic or cultural integrity of the property.
(iii) Certified historic structure. The term certified historic
structure, for purposes of this section, means any building, structure
or land area which is--
(A) Listed in the National Register, or
(B) Located in a registered historic district (as defined in section
48(g)(3)(B)) and is certified by the Secretary of the Interior (pursuant
to 36 CFR 67.4) to the Secretary of the Treasury as being of historic
significance to the district.
A structure for purposes of this section means any structure, whether or
not it is depreciable. Accordingly easements on private residences may
qualify under this section. In addition, a structure would be considered
to be a certified historic structure if it were certified either at the
time the transfer was made or at the due date (including extensions) for
filing the donor's return for the taxable year in which the contribution
was made.
(iv) Access. (A) In order for a conservation contribution described
in section 170(h)(4)(A)(iv) and this paragraph (d)(5) to be deductible, some visual public access to the donated property is required. In the
case of an historically important land area, the entire property need
not be visible to the public for a donation to qualify under this
section. However, the public benefit from the donation may be
insufficient to qualify for a deduction if only a small portion of the
property is so visible. Where the historic land area or certified
historic structure which is the subject of the donation is not visible
from a public way (e.g., the structure is hidden from view by a wall or
shrubbery, the structure is too far from the public way, or interior
characteristics and features of the structure are the subject of the
easement), the terms of the easement must be such that the general
public is given the opportunity on a regular basis to view the
characteristics and features of the property which are preserved by the
easement to the extent consistent with the nature and condition of the
property.
(B) Factors to be considered in determining the type and amount of
public access required under paragraph (d)(5)(iv)(A) of this section
include the historical significance of the donated property, the nature
of the features that are the subject of the easement, the remoteness or
accessibility of the site of the donated property, the possibility of
physical hazards to the public visiting the property (for example, an
unoccupied structure in a dilapidated condition), the extent to which
public access would be an unreasonable intrusion on any privacy
interests of individuals living on the property, the degree to which
public access would impair the preservation interests which are the
subject of the donation, and the availability of opportunities for the
public to view the property by means other than visits to the site.
(C) The amount of access afforded the public by the donation of an
easement shall be determined with reference to the amount of access
permitted by the terms of the easement which are established by the
donor, rather than the amount of access actually provided by the donee
organization. However, if the donor is aware of any facts indicating
that the amount of access that the donee organization will provide is
significantly less than the amount of access permitted under the terms
of the easement, then the amount of access afforded the public shall be
determined with reference to this lesser amount.
(v) Examples. The provisions of paragraph (d)(5)(iv) of this section
may be illustrated by the following examples:
Example 1. A and his family live in a house in a certified historic
district in the State of X. The entire house, including its interior,
has architectural features representing classic Victorian period
architecture. A donates an exterior and interior easement on the
property to a qualified organization but continues to live in the house
with his family. A's house is surrounded by a high stone wall which
obscures the public's view of it from the street. Pursuant to the terms
of the easement, the house may be opened to the public from 10:00 a.m.
to 4:00 p.m. on one Sunday in May and one Sunday in November each year
for house and garden tours. These tours are to be under the supervision of the donee and open to members of the general public upon payment of a small fee. In addition, under the terms
of the easement, the donee organization is given the right to photograph
the interior and exterior of the house and distribute such photographs
to magazines, newsletters, or other publicly available publications. The
terms of the easement also permit persons affiliated with educational
organizations, professional architectural associations, and historical
societies to make an appointment through the donee organization to study
the property. The donor is not aware of any facts indicating that the
public access to be provided by the donee organization will be
significantly less than that permitted by the terms of the easement. The
2 opportunities for public visits per year, when combined with the
ability of the general public to view the architectural characteristics
and features that are the subject of the easement through photographs,
the opportunity for scholarly study of the property, and the fact that
the house is used as an occupied residence, will enable the donation to
satisfy the requirement of public access.
Example 2. B owns an unoccupied farmhouse built in the 1840's and
located on a property that is adjacent to a Civil War battlefield.
During the Civil War the farmhouse was used as quarters for Union
troops. The battlefield is visited year round by the general public. The
condition of the farmhouse is such that the safety of visitors will not
be jeopardized and opening it to the public will not result in
significant deterioration. The farmhouse is not visible from the
battlefield or any public way. It is accessible only by way of a private
road owned by B. B donates a conservation easement on the farmhouse to a
qualified organization. The terms of the easement provide that the donee
organization may open the property (via B's road) to the general public
on four weekends each year from 8:30 a.m. to 4:00 p.m. The donation does
not meet the public access requirement because the farmhouse is safe,
unoccupied, and easily accessible to the general public who have come to
the site to visit Civil War historic land areas (and related resources),
but will only be open to the public on four weekends each year. However,
the donation would meet the public access requirement if the terms of
the easement permitted the donee organization to open the property to
the public every other weekend during the year and the donor is not
aware of any facts indicating that the donee organization will provide
significantly less access than that permitted.
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