Senate Finance Committee Chairman Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) released legislative text yesterday with new restrictions on conservation easements as a revenue offset for their new retirement savings bill.

Easement Restrictions

• Section 1104 of the Senate Finance committee’s summary of the Enhancing American Retirement Now (EARN) Act states that since 2016, the IRS “has identified certain syndicated conservation easement transactions involving pass-through entities as ‘listed transactions’ carrying a high potential for abusive tax avoidance.” (Legislative text)
  
  
• The EARN provision would disallow a charitable deduction for a qualified conservation contribution if the charitable deduction claimed exceeds two and one half times the sum of each partner’s relevant basis in such partnership— unless the contribution meets a three-year holding period test. (Section-by-section summary of the EARN Act)

What’s Next

• The Senate Finance Committee adopted the conservation easement proposal in June during consideration of the EARN Act, which passed on a 28-0 vote. The House passed its retirement legislation by a wide margin in March. The two packages will have to be reconciled. (PoliticoPro and TaxNotes, Sept. 9)

Conservation easement changes, retirement-related legislation, expiring tax provisions, and potentially other tax proposals could gain momentum during the “lame duck” legislative session  following the November mid-term elections.

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