Enhanced Easement Incentive and Estate Tax Expire, Our Outlook for 2010

The U.S. Senate remained in session until December 24, and they did manage to pass a health-care bill, extend the nation’s debt limit (for two months or so), and pass the Defense Appropriations bill.  But they didn’t extend the enhanced easement incentive or resolve (even temporarily) the estate tax issue.

As of January 1, 2010:

* The enhanced tax incentive for donations of conservation easements has expired.  All requirements for donations of conservation easements (and historic preservation easements) remain the same as they were in 2009, but the maximum deduction for such a donation is limited to 30% of an individual’s adjusted gross income (AGI) in the year of the donation, with the remainder of the donation being carried forward for a maximum of 5 additional years.  Deductions by C-corporations are limited to 10% of AGI.  Click here for our Frequently Asked Questions, updated to reflect the expiration of the incentive.

* The “S-corp fix” has expired. Charitable deductions by S-corporation shareholders will, again, be limited to their basis in the donated property.  Since depreciation often greatly reduces basis in farm property, this change could severely limit the ability for S-corporation shareholders to deduct the full value of donated land or easements.  A one-year extension of the “S-corp fix” was included in the House “extenders” package and we’re hopeful it will be extended, along with the easement incentive, in early 2010.

* There is zero estate tax.  Democratic leaders of the House and Senate say they will try to reinstate an estate tax early this year, and that they will make it retroactive so that it covers the estates of people dying in January.  But when they might be able to actually do this (over substantial Republican opposition), what it will look like, and whether it is a long-term or short-term solution, is anyone’s guess.  Unless Congress acts prior to 2011, the estate tax will return with a $1 million unified credit and a top rate of 55%.  In addition, without congressional action, the geographic limits that were removed from the 2031(c) exemption, for lands protected with a donated easement, will return.  Click here for more details.

* For those of you into the details of tax policy, there is now a limited carryover basis for inherited property.  In the past, when one inherited real property, its basis was reset to the value at the time of inheritance.  If you sold it the next day, you did not pay any capital gains tax.  Now, at least temporarily, there are some complicated rules that mean that sales of expensive inherited property may leave the seller with a substantial capital gains tax.  As noted above, Democrats say they will get rid of this.

We fully expect the Congress to try to reinstate the enhanced deduction for easement donations in 2010, and to make the incentive retroactive to January 1st.  Both House and Senate leaders say they will do this early in 2010 — but, as we have seen, the Congressional schedule is not predictable, particularly in the bitterly partisan atmosphere we can expect to continue for some time.  This is why we need to keep up our work to make this deduction permanent, so that Congress understands the importance of getting this done, and so that potential easement donors know what the law will be during the long time it takes them to plan a donation.

If someone donated an easement sometime in 2006-2009, they can continue to deduct 50% of their AGI per year (or, if they are a qualified farmer or rancher, 100%), and carry over unused amounts of their donation for 15 years.  What counts is what the law was at the time they made their donation.  So, if you donated in 2009, and you are filling out your tax forms in 2010, you get the 50 or 100% AGI deduction and 15 year carryover.  Make sure your tax preparer gets this right, because the folks who write computer programs for tax professionals (as well as for you and me) have a hard time keeping up with changes in the law!

Our Bills Remain In Play and Still Need Your Help

Our basic legislative strategy remains unchanged and we still need help educating your Senators and Representatives.  Our bill to make the enhanced easement incentive permanent is still alive, with the same co-sponsor lists and bill numbers.   Additional co-sponsors for S. 812 and  H.R. 1831 help!  So does thanking existing co-sponsors and encouraging them to get a permanent incentive included in legislation renewing expired tax provisions, the estate tax package, or another tax bill, ASAP.  For the latest information and resources, please visit:  http://www.lta.org/easementincentive.

We also remain committed to enhancing estate tax incentives for land conservation as part of an overall estate tax package. Please visit  http://www.lta.org/estatetax for more information about H.R. 3050, H.R. 3524 and H.R. 1328, bills to increase the estate tax exemption for lands under easement or agricultural lands generally.  We’re working with friends in the House and Senate to explore creative approaches that would combine these measures and reduce their cost.

Thank you for all you have done so far to help make the conservation easement tax incentive permanent.  Is this harder than it ought to be?  You bet!  We will be working hard in 2010 to get it done, so stay tuned for ways you can help to increase the pace of conservation.

Thanks for helping!

Conservation Matters: December 2009

The Conservation Reserve Enhancement Program (CREP)

Since 1997, Maryland’s Conservation Reserve Enhancement Program (CREP) has helped thousands of Maryland landowners plant streamside buffers, establish wetlands, protect highly erodible land, and create wildlife habitat while providing them with a steady, dependable land rental income.  CREP is a state-federal partnership that makes it easy for farmers to protect their streams without hurting their bottom line.  The new CREP program has been simplified and offers more financial incentives to encourage landowners to establish grass and forest cover on their marginal cropland and pastureland… Click here to read the full PDF of Conservation Matters – A publication of the Montgomery Soil Conservation District: December 2009.

What’s Up With EPIC?

By Mike Rubin
Reflecting upon EPIC’s evolution provides an inspirational account of bringing together equestrian enthusiasts in Montgomery County for over 10 years in support of land preservation.  We are grateful to all our individual supporters, barn affiliates, and non-profit members such as TROT, PBHTA, Potomac Conservancy, Solutions not Sprawl, Montgomery Countryside Alliance (MCA), Boyds Civic Association and many others.

Dating back to 1999, there seemed to have been a real sense of dismay and resignation regarding local politics and the development scene.  Doug Duncan had his “Go Montgomery” slate of candidates in the offing, developers were building like mad and major land tracts located on our side of the Ag Reserve were on the chopping block.  Additionally, the big push for another bridge crossing the Potomac and supporting roadways through us was underway.  One of my first introductions to ruination out here was the attempt to turn 200 acres of forest on Slidell road into another golf course.  It’s now Bucklodge Forest, saved by the community’s opposition and, of course, money for consultants and legal fees (my first donation was to this cause).

Segue to today, and we can boast about the County’s recent purchase of a major part of the Thompson Farm, adjacent to Bucklodge Forest, and the concomitant saving of farmland and equestrian trails.  Major milestones along the way include preserving thousands of acres of land in Boyds and Poolesville, beating back many attempts to further undermine the Ag Reserve and adding numerous people to our list of aware supporters.

To further enhance preservation efforts, EPIC has focused on augmenting trail access by creating the Dry Seneca Creek and Breezy Loop trails.  EPIC’s focus going forward is to continue its trail blazing efforts but it’s now on the County’s radar screen for easement responsibility. This is particularly important when one takes into account the Barnesville Oaks pending development and the need to establish a template for advocating proper trail systems in such major projects.

In addition to tackling easement stewardship, increasing trail access and connectivity requires a reliable and dedicated trail maintenance program.  As the roles and responsibilities of EPIC continue to surmount, so does our need for both your support and continued funding.  EPIC is at a vital crossroads of making significant headway as being recognized by the County as the go-to equestrian organization, as evidenced by EPIC’s involvement in implementing Montgomery County’s recent horse survey update.  We look to our wonderful constituents to help us forge new ground in the coming years.

More immediately, in 2010, our trail blazing efforts will start by expanding the Breezy Loop trails.  Thereafter, EPIC plans to negotiate the creation of trails with the County once they take title to the 415+ acre Casey property from the state of Maryland.  This Casey tract is adjacent to the Hoyles Mill Conservation Park across White Ground Road.  The ultimate goal is to establish EPIC trails that maximize the wonderful Breezy Loop trail head on Bucklodge Road by connecting it to Hoyles Mill, through the County’s newly acquired Thompson Farm land and continuing on into Bucklodge Forest.  EPIC is very much looking forward to debuting these exciting new trails new year.  See you out there soon!

Support HR 1912 the “Complete America’s Great Trails Act”

Contact your Representative and encourage them to support HR 1912, the “Complete America’s Great Trails Act” -

The Complete America’s Great Trails Act would provide a tax credit to private landowners who grant conservation easements to National Scenic Trails. Private landowners would have a new incentive to allow trail users to pass through their property, and establish a guaranteed corridor that protects the continuity of the trails. (Read more)

09/26/09

09/12/09

“We want horses rather than houses, combines instead of cul-de-sacs.”

“We want horses rather than houses, combines instead of cul-de-sacs.” – County Councilman George Leventhal.  State provides $5 million to jump start Building Lot Termination program.

County leaders tout new farm preservation program:  http://www.gazette.net/stories/08192009/montnew191642_32526.shtml

08/29/09

08/22/09

Watch for Turtles on EPIC’s Newest Trail

The Turtle Trail is EPIC’s latest addition to the Breezy Loop Trail. The Turtle Trail trailhead can be accessed at the Potomac Pony Club grounds at 19301 Bucklodge Road across from Moore Road in Boyds, MD.

The Turtle Trail signposts are marked alphabetically from “A” to “H” in the bottom right corner of each sign patch so as not to confuse the rider with the Breezy Loop sign patches which are numerically marked.

The Turtle Trail is so named because of its proximity to the site of a box turtle habitat relocation effort by the Humane Society of the United States (HSUS) and landowner  (and EPIC co-founder) Mike Rubin. Part of the environmental mitigation program related to the Intercounty Connector (ICC) was the relocation and study of box turtles. As their habitat along the path of the ICC is being destroyed, the HSUS was tasked 2 ½ years ago with capturing and moving as many of these creatures as possible. The plan was to move the population to a new, safe locale and then sequester them for a period of time, then release. Two large pens were constructed, turtles placed therein, and now, two years later, they’ve been released with GPS locators implanted.

Please be careful not to step on a turtle as you ride through. (Box turtles like to rest in the middle of trails!)

Turtle Trail adds a quiet, shady 15 minutes more to your Breezy Loop ride.

There are a few log jumps along the way. This trail lies on low ground so it  may be closed in the rainy season.

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