BRODIE FARQUHAR Star-Tribune correspondent | Posted: Monday, November 5, 2007 12:00 am
Land trusts in Wyoming are racing the clock to wrap up conservation easements before the end of the year, when attractive tax benefits are slated to expire.
The land trusts and their client farmers and ranchers are hoping, but not counting on Congress to pass legislation that would extend those tax benefits beyond Dec. 31.
The Teton Regional Land Trust, which operates in both Idaho and Wyoming, has three times as many projects as normal for this time of year.
"We're turning away projects and bidding out some baseline evaluation work that we normally do in house," said Michael Winfield, executive director.
Glen Pauley, of the Wyoming Stock Growers Agricultural Land Trust, said he too is busy with late efforts to create conservation easements.
"All the appraisers are booked up," he said. "That's the real bottleneck."
"Oh, yes, we've been busy," said Sarah Dreizler, outreach coordinator for the Green River Land Trust. Business always picks up toward the end of the year, she said, but especially this year as farmers and ranchers are anxious to lock in tax incentives before they expire.
Those land trusts are among the organizations working in Wyoming to help ranchers interested in preserving open space. Conservation easements maintain private ownership of lands but protect them from development. Tens of thousands of acres have been protected in the state in recent years.
Currently, under 2006 legislation, tax deductions of up to 100 percent of adjusted gross income boost financial options for ranchers who donate conservation easements on their land in 2006 and 2007.
The Pension Protection Act of 2006 provides such tax incentives as:
* Raising the deduction a landowner can take for donating a conservation easement from 30 percent of his income in any year to 50 percent
* Allowing qualifying farmers and ranchers to deduct up to 100 percent of their income.
* Increasing the number of years over which a donor can take those deductions from six years to 16 years.
Under the law, farmers and ranchers are defined as people who receive more than 50 percent of their income from "the trade or business of farming."For an easement to qualify for the 100 percent deduction, it must contain a restriction requiring that the land remain "available for agriculture."
According to the Wyoming Stock Growers Agricultural Land Trust, under the previous rules, a landowner earning $50,000 a year who donated a $1 million conservation easement could take a $15,000 deduction for the year of the donation and for an additional five years - a total of $90,000 in tax deductions. The new rules allow that landowner to deduct $25,000 for the year of the donation and for an additional 15 years.That equals $400,000 in deductions.
If the landowner qualifies as a farmer or rancher, he can zero out his taxes. In such a case he could take a maximum of $800,000 in deductions for a $1 million gift.Additionally, the estate tax benefits for conservation easement donations, both through a reduction in the land's appraised value and additional exclusions, remain unchanged.
New bill
Senate Bill 469, the Rural Heritage Conservation Extension Act of 2007, would make permanent the tax breaks in the Pension Protection Act of 2006. Introduced by Sen. Max Baucus, D-Mont., and Sen. Chuck Grassley, R-Iowa, the bill has 23 co-sponsors, including Sen. Mike Enzi, R-Wyo.
The measure has a companion bill in the House, HR 1576, with 135 co-sponsors, including Rep. Barbara Cubin, R-Wyo.
In a session marked by sharp disagreements between Capitol Hill and the White House, the Bush administration supports the legislation. The bill also enjoys the support of the Congressional Sportsmen's Caucus, a bipartisan group of lawmakers who work to boost hunting and fishing causes across the country.
Enzi said he was pleased Baucus included the measure as part of a larger package of habitat bills that passed the Senate Finance Committee on Oct. 24. Enzi said he hopes the full Senate will take action on this measure as a stand-alone bill or as part of a larger package of tax extenders before the end of the year.
Enzi's staff said he was still reviewing the revenue-raiser that Baucus would use to pay for this and the other provisions of the bill.
"Most tax credits benefit bank accounts, but the tax credits for conservation easements also benefit future generations," Enzi said in a statement released by his office. "Conservation easements are a voluntary way for landowners to make a strong commitment to the environment and wildlife on their land. The least Congress can do in exchange for that commitment is to permanently extend these tax credits. Extension of these credits will provide stability and encourage more landowners to take part in easements so we can grow old knowing our children will live to see the land as we see it today."
Andrea Erickson Quiroz, executive director of the Wyoming chapter of The Nature Conservancy, said the tax benefits have proven to be popular, particularly in the West. The Pension Act provisions have also been popular with politicians, because it won't cost money to extend.
"I'm pretty hopeful that the tax benefits will be extended," she said.