Conservation Donation Worth Tax Break

Ranchers who donate land for conservation can receive an increased tax deduction and be ensured those lands will remain in ag production according to provisions contained in a pensions package on its way to the President Bush for his signature.  The adjusted deduction for conservation easement donations within H.R. 4 provides tax incentives for protection of open space and for farm and ranch stewardship.

The Senate approved H.R. 4, The Pension Protection Act of 2006, on August 3 by a vote of 93-5.  The package passed the House July 28. NCBA members have worked with Representatives Bill Thomas (R-Calif.) and Richard Pombo (R-Calif.) to include this language to better protect the agricultural character of lands donated for conservation.

“This bill will provide a major increase in the deductions landowners can take for donating a conservation easement in 2006 and 2007,” says Jeff Eisenberg, NCBA’s director of federal lands.  “It’s important that we focus efforts on keeping ag lands intact and in production, rather than offer ranchers incentives to give up their land for other uses.”

The Qualified Conservation Contribution Provision includes these items of interest to ranchers:

•  Raising the maximum deduction a donor can take for donation of a conservation easement from 30 percent of adjusted gross income in any year to 50 percent (provided that the contribution does not prevent use of the donated land for farming or ranching);

•  Allowing qualified farmers and ranchers to deduct up to 100 percent of adjusted gross income; and

•  Increasing the number of years over which a donor can use conservation tax deductions from 6 to 16 years.

This provision will be effective for donations made through Dec. 31, 2007.  After that, the law will revert back to previous provisions, unless Congress extends the provision prior to the deadline.