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Nonprofits, Here are 6 Key Documents You Need to Prepare for a Conservation Easement Audit

July 05, 2022

Are you preparing for a conservation easement audit? You’ll need several key documents including an appraisal, form 8283 and more.

Did you read our blog, Nonprofits, Are You Familiar with Conservation Easements? You’ll want to read it for key background on conservation easements. Here, we cover 5 key documents you will need to prepare for an audit.

6 Documents needed for a Conservation Easement Audit

  1. Deed of Easement:
    • Describes the conservation purpose(s), restriction(s) and permissible use of the property
    • To be effective it must contain legally binding restrictions
    • Enforceable, e.g., by recordation in land records of the jurisdiction where the property is located
  2. Form 8283- Noncash Charitable Contribution- This form is used to report information about noncash charitable contributions. This form must be completed for each noncash contribution that is more than $500.
    • Section A must be completed for noncash charitable contributions less than $5,000.
    • Section B must be completed for noncash contributions greater than $5,000.
    • Section B Part I- Part V:
      • Acquisition date of the property
      • Type of property
      • How the property was acquired by the donor
      • Donor’s cost or adjusted basis
      • Bargain Sale amount received
      • Appraised fair market value of the easement
      • Declaration of Appraiser must be completed by the qualified appraiser for donations more than $5,000
  3. Appraisal-Qualified appraisals are required for all contribution deductions for conservation easements valued at more than $5,000. To be a qualified appraisal property you (1) must be treated as a qualified appraisal under regulations or other guidance prescribed by the Secretary and (2) must be conducted by a qualified appraiser in accordance with generally accepted appraisal standards and any regulations or other guidance prescribed by the Secretary.
  4. Baseline Documentation Report- A report which contains a collection of maps, photographs, written descriptions of the property, its natural resources, and the conservation values that are being protected. A donor that retains rights in property subject to a donated conservation easement must give the qualified organization documentation (baseline study) that establishes the condition of the property at the time of the gift. The baseline study must be signed by both the donor and the qualified organization. The baseline study must be given to the qualified organization prior to the time the donation is made.
  5. Contemporaneous Written Acknowledgement (CWA)-In order for the written acknowledgement to be contemporaneous, it must be obtained by the donor no later than the earlier of the date for which the tax return was actually filed or the due date (including extensions) for the year in which the gift was made. A contemporaneous written acknowledgement is required for all contribution deductions of $250 or more (in cash or property) and should contain the following:
    • The name of the qualified organization receiving the gift
    • Amount of cash contribution
    • Description (but not the value) of the noncash contribution
    • Statement that no goods or services were provided by the organization in return for the contribution
    • Description and good faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution and
    • A statement that goods or services (if any) that an organization provided in return for the contributions consisted entirely of intangible religious beliefs
  6. Form 8283-V (Façade filing fee verification): Payment Voucher for Filing Fee Under Section 170(f)(13) with $500 payment
    • Donor must pay $500 filing fee to the US Treasury for donations of easements on buildings in registered historic districts if they claim a deduction of more than $10,000 for a charitable contribution of an easement on the exterior of a building in a registered historic district.
    • No deduction is allowed unless the taxpayer includes the fee with the return

Need assistance with your audit? We are here to help. Contact us today.

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