Standard 10: Tax Benefits

Transcription

1 2004 VERSION OF STANDARD 10 Standard 10: Tax Benefits The land trust works diligently to see that every charitable gift of land or easements meets federal and state tax law requirements. A. Tax Code Requirements. The land trust notifies (preferably in writing) potential land or easement donors who may claim a federal or state income tax deduction, or state tax credit, that the project must meet the requirements of IRC 170 and the accompanying Treasury Department regulations and/or any other federal or state requirements. The land trust on its own behalf reviews each transaction for consistency with these requirements. B. Appraisals. The land trust informs potential land or easement donors (preferably in writing) of the following: IRC appraisal requirements for a qualified appraisal prepared by a qualified appraiser for gifts of property valued at more than $5,000, including information on the timing of the appraisal; that the donor is responsible for any determination of the value of the donation; that the donor should use a qualified appraiser who follows Uniform Standards of Professional Appraisal Practice; that the land trust will request a copy of the completed appraisal; and that the land trust will not knowingly participate in projects where it has significant concerns about the tax deduction. C. No Assurances on Deductibility or Tax Benefits. The land trust does not make assurances as to whether a particular land or easement donation will be deductible, what monetary value of the gift the Internal Revenue Service (IRS) and/or state will accept, what the resulting tax benefits of the deduction will be, or whether the donor s appraisal is accurate. D. Donee Responsibilities IRS Forms 8282 and The land trust understands and complies with its responsibilities to sign the donor s Appraisal Summary Form 8283 and to file Form 8282 regarding resale of donated property when applicable. The land trust signs Form 8283 only if the information in Section B, Part 1, Information on Donated Property, and Part 3, Declaration of Appraiser, is complete. If the land trust believes no gift has been made or the property has not been accurately described, it refuses to the sign the form. If the land trust has significant reservations about the value of the gift, particularly as it may impact the credibility of the land trust, it may seek additional substantiation of value or may disclose its reservations to the donor. (See 5B for other gift substantiation requirements.) Land Trust Standards and /February 2017/Page 1

2 STANDARD 10 DECONSTRUCTED INTO ELEMENTS Standard 10: Tax Benefits The land trust works diligently to see that every charitable gift of land or easements meets federal and state tax law requirements. A. Tax Code Requirements The land trust notifies (preferably in writing) potential land or easement donors who may claim a federal or state income tax deduction, or state tax credit, that the project must meet the requirements of IRC 170 and the accompanying Treasury Department regulations and/or any other federal or state requirements The land trust on its own behalf reviews each transaction for consistency with these requirements B. Appraisals The land trust informs potential land or easement donors (preferably in writing) of the following: o IRC appraisal requirements for a qualified appraisal prepared by a qualified appraiser for gifts of property valued at more than $5,000 Including information on the timing of the appraisal o That the donor is responsible for any determination of the value of the donation o That the donor should use a qualified appraiser who follows Uniform Standards of Professional Appraisal Practice o That the land trust will request a copy of the completed appraisal o That the land trust will not knowingly participate in projects where it has significant concerns about the tax deduction C. No Assurances on Deductibility or Tax Benefits The land trust does not make assurances as to o Whether a particular land or easement donation will be deductible o What monetary value of the gift the Internal Revenue Service (IRS) and/or state will accept o What the resulting tax benefits of the deduction will be o Whether the donor s appraisal is accurate D. Donee Responsibilities IRS Forms 8282 and 8283 The land trust understands and complies with its responsibilities to sign the donor s Appraisal Summary Form 8283 o The land trust signs Form 8283 only if the information in Section B, Part 1, Information on Donated Property, and Part 3, Declaration of Appraiser, is complete o If the land trust believes no gift has been made or the property has not been accurately described, it refuses to the sign the form o If the land trust has significant reservations about the value of the gift, particularly as it may impact the credibility of the land trust, it may Seek additional substantiation of value Disclose its reservations to the donor (See 5B for other gift substantiation requirements.) The land trust understands and complies with its responsibilities to file Form 8282 regarding resale of donated property when applicable Land Trust Standards and /February 2017/Page 2

3 STANDARD 10 TRACK CHANGES Standard 10: Tax Benefits and Appraisals The lland trusts works diligently to see that every charitable gift of land or conservation easements meets federal and state tax law requirements, to avoid fraudulent or abusive transactions and to uphold public confidence in land conservation. A. Tax Code RequirementsLandowner Notification The land trust notifies (preferably in writing) Inform potential land or conservation easement donors who may claim a federal or state income tax deduction, (or state tax credit), in writing and early in project discussions, that: o tthe project must meet the requirements of IRC 170 and the accompanying Treasury Department regulations and/or any other federal or state requirements o The donor is responsible for any determination of the value of the donation o The Treasury Department regulations require the donor to obtain a qualified appraisal prepared by a qualified appraiser for gifts of property valued at more than $5,000 o Prior to making the decision to sign the IRS Form 8283, the land trust will request a copy of the completed appraisal o The land trust is not providing individualized legal or tax advice The land trust on its own behalf reviews each transaction for consistency with these requirements B. Appraisals The land trust informs potential land or easement donors (preferably in writing) of the following: o IRC appraisal requirements for a qualified appraisal prepared by a qualified appraiser for gifts of property valued at more than $5,000 Including information on the timing of the appraisal o That the donor is responsible for any determination of the value of the donation o That the donor should use a qualified appraiser who follows Uniform Standards of Professional Appraisal Practice o That the land trust will request a copy of the completed appraisal o That the land trust will not knowingly participate in projects where it has significant concerns about the tax deduction C. No Assurances on Deductibility or Tax Benefits The land trust ddoes not make assurances as to: o Whether a particular land or conservation easement donation will be deductible o What monetary value of the gift the Internal Revenue Service (IRS) and/or state will accept o What the resulting tax benefits of the deduction or credit will be, if any o Whether the donor s appraisal is accurate DB. Donee Legal Requirements: Land Trust Responsibilities IRS Forms 8282 and 8283 The land trust understands and complies with its responsibilities to sign the donor s Appraisal Summary Form 8283 If the land trust holds federally tax-deductible conservation easements, meet the requirements for a qualified organization under IRC 170(h) Land Trust Standards and /February 2017/Page 3

4 STANDARD 10 TRACK CHANGES The land trust ssigns the Form 8283 only if the information in Section B, Part 1I, Information on Donated Property, and Part 3, Declaration of Appraiser, is complete and is an accurate representation of the gift o Refuse to sign the Form 8283 Iif the land trust believes no gift has been made or the property has not been accurately described, it refuses to the sign the form If the land trust has significant reservations about the value of the gift, particularly as it may impact the credibility of the land trust, it may o Seek additional substantiation of value o Disclose its reservations to the donor (See 5B for other gift substantiation requirements.) The land trust understands and complies with its responsibilities to ffile IRS Form 8282 regarding resale ofwhen conveying a donated real property when applicableinterest within three years of the date the land trust received the property C. Avoiding Fraudulent or Abusive Transactions Review, on the land trust s own behalf, each transaction for consistency with federal and state income tax deduction or credit requirements Evaluate the Form 8283 and any appraisal to determine whether the land trust has substantial concerns about the appraised value or the appraisal Discuss substantial concerns about the appraisals, the appraised value or other terms of the transaction with legal counsel and take appropriate action, such as o Documenting that the land trust has shared those concerns with the donor o Seeking additional substantiation of value o Withdrawing from the transaction prior to closing o Or refusing to sign the Form 8283 When engaging in transactions with pass-through entities of unrelated parties, particularly those offered or assembled by a third party or described as a syndication by the IRS, o Require a copy of the appraisal prior to closing o Decline to participate in the transaction if the appraisal indicates an increase in value of more than 2.5 times the basis in the property within 36 months of the pass-through entity s acquisition of the property, the value of the donation is $1 million or greater and the terms of the transaction do not satisfy the Land Trust Alliance Tax Shelter Advisory Land Trust Standards and /February 2017/Page 4

5 STANDARD 10 REVISED CLEAN Yellow highlighting indicates new practices or new practice elements Blue indicates designated accreditation indicator elements Standard 10: Tax Benefits and Appraisals Land trusts work diligently to see that every charitable gift of land or conservation easement meets federal and state tax law requirements, to avoid fraudulent or abusive transactions and to uphold public confidence in land conservation. A. Landowner Notification 1. Inform potential land or conservation easement donors who may claim a federal or state income tax deduction (or state tax credit), in writing and early in project discussions, that: a. The project must meet the requirements of IRC 170 and the accompanying Treasury Department regulations and any other federal or state requirements b. The donor is responsible for any determination of the value of the donation c. The Treasury Department regulations require the donor to obtain a qualified appraisal prepared by a qualified appraiser for gifts of property valued at more than $5,000 d. Prior to making the decision to sign the IRS Form 8283, the land trust will request a copy of the completed appraisal e. The land trust is not providing individualized legal or tax advice 2. Do not make assurances as to: a. Whether a particular land or conservation easement donation will be deductible b. What monetary value of the gift the IRS and/or state will accept c. What the resulting tax benefits of the deduction or credit will be, if any B. Legal Requirements: Land Trust Responsibilities 1. If the land trust holds federally tax-deductible conservation easements, meet the requirements for a qualified organization under IRC 170(h) 2. Sign the Form 8283 only if the information in Section B, Part I, Information on Donated Property, is complete and is an accurate representation of the gift a. Refuse to sign the Form 8283 if the land trust believes no gift has been made or the property has not been accurately described 3. File IRS Form 8282 when conveying a donated real property interest within three years of the date the land trust received the property C. Avoiding Fraudulent or Abusive Transactions 1. Review, on the land trust s own behalf, each transaction for consistency with federal and state income tax deduction or credit requirements 2. Evaluate the Form 8283 and any appraisal to determine whether the land trust has substantial concerns about the appraised value or the appraisal 3. Discuss substantial concerns about the appraisal, the appraised value or other terms of the transaction with legal counsel and take appropriate action, such as a. Documenting that the land trust has shared those concerns with the donor b. Seeking additional substantiation of value c. Withdrawing from the transaction prior to closing d. Or refusing to sign the Form When engaging in transactions with pass-through entities of unrelated parties, particularly those offered or assembled by a third party or described as a syndication by the IRS, a. Require a copy of the appraisal prior to closing Land Trust Standards and /February 2017/Page 5

6 STANDARD 10 REVISED CLEAN Yellow highlighting indicates new practices or new practice elements Blue indicates designated accreditation indicator elements b. Decline to participate in the transaction if the appraisal indicates an increase in value of more than 2.5 times the basis in the property within 36 months of the pass-through entity s acquisition of the property, the value of the donation is $1 million or greater and the terms of the transaction do not satisfy the Land Trust Alliance Tax Shelter Advisory Land Trust Standards and /February 2017/Page 6