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Treasury and IRS Issue Safe Harbor Deed Language for Conservation Easement Deeds

S.J. Steinhardt
Published Date:
Apr 11, 2023

The Treasury Department and IRS) issued a notice that provided safe harbor deed language for extinguishment (termination or annulment) and boundary line adjustment clauses as required by the SECURE 2.0 Act of 2022.

The safe harbor boundary line adjustment clause is: "Pursuant to Notice 2023-30, Donor and Donee agree that boundary line adjustments to the real property subject to the restrictions may be made only pursuant to a judicial proceeding to resolve a bona fide dispute regarding a boundary line's location."

The relevant section of the law gives donors the opportunity to amend certain conservation easement deeds to substitute the safe harbor language for the corresponding language in the original deed. Taxpayers will have until July 24, 2023, to record their safe harbor deed amendments.

The SECURE 2.0 Act includes a variety of provisions related to retirement accounts. One provision aims to curb the abuse of conservation easements as a way to avoid taxes—by, for example, claiming charitable deductions on private land set aside for golf courses.

Originally known as the Charitable Conservation Easement Program Integrity Act, the law imposed a limitation on the tax deduction for qualified conservation contributions made by certain partnerships if the amount of the contribution exceeds 2.5 percent times the sum of each partner's relevant basis in the partnership. This limitation also applies to other pass-through entities, such as S corporations.

The notice also described the process donors may use to amend an original eligible easement deed to substitute the safe harbor language for the corresponding language in the original deed.

The notice addressed only corrections to extinguishment and/or boundary line adjustment clauses in accordance with the SECURE 2.0 Act and not any other deed amendments.

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