Conservation contribution disallowed.

• Author: Turner, James D.

Pan investor, purchased 30 acres of unimproved land (G) in a historical overlay district, subject to county regulations that were more stringent for property within such a district. Zoning permitted 30 lots--county approval was required for denser zoning usage. However, the 30 acres were sold without an application for a change in zoning. At that time, there was only the possibility that the number of buildings or dwellings could have been increased from 30 to a larger number. P, claiming he was entitled to develop up to 62 residences on smaller lots, executed a deed to the county purporting to limit development to 30 residences. He then claimed a contribution deduction for a qualified conservation contribution under Sec. 170(h)(1).

Qualified Conservation Contribution

Sec. 170(f)(3) does not permit a deduction for a charitable gift of property consisting of less than the donor's entire interest. An exception applies in the case of a "qualified conservation contribution" under Sec. 170(f)(3)(B)(iii). A contribution of real property is a qualified conservation contribution if the:

* Real property is a "qualified real property interest";

* Donee is a "qualified organization"; and

* Contribution is "exclusively for conservation purposes"; see Sec. 170(h)(1).

The parties dispute whether there was a qualified real property interest and whether the contribution is exclusively for conservation purposes. Here, P was not entitled to the deduction, because he failed to show that the conservation was exclusively for conservation purposes.

Definition

A contribution is made "exclusively for conservation purposes" if it meets a two-part test. First, a contribution is for a conservation purpose if it:

1. Preserves land for the general public's outdoor recreation or education;

2. Protects a relatively natural habitat of fish, wildlife or plants, or similar ecosystem (the natural habitat requirement);

3. Preserves open space either for the scenic enjoyment of the general public or pursuant to a Federal, state or local governmental conservation policy and yields a significant public benefit (the open-space requirement); or

4. Preserves a historically important land area or a certified historic structure (the historic preservation requirement); see Sec. 170(h)(4)(A) and Regs. Sec. 1.170A-14(d)(1).

In addition, the "exclusively for conservation purposes" requirement may be met only if the conservation purpose is protected in perpetuity; see See. 170(h)(5)(A).

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