Editing Conservation easement (section)

==Income tax credits (states)==
Land conservation advocates have long tried to enact additional tax incentives for landowners to donate easements, above the federal charitable deduction (and state tax deduction in states that conform to federal tax process). There has been discussion of creating a federal income tax credit for easement donors since around 1980. However, no federal tax credit has been enacted. States, however, have moved ahead to grant credits that can be used to pay state income tax to donors of qualified conservation easements. In 1983, North Carolina became the first state to establish such a program.<ref>North Carolina G.S.§105-151.12</ref>

Attorney Philip Tabas of [[The Nature Conservancy]] promoted the state tax credit idea widely in the 1990s. In 1999, four state legislatures enacted state tax credit programs (Virginia, Delaware, Colorado, and Connecticut, in that order). South Carolina and California followed in 2000. Several other states have followed since.

For landowners with little income subject to state taxation, a tax credit is of little value and may be insufficient incentive to grant a conservation easement. For this reason, some states, including Colorado and Virginia, the state tax credit is transferable—that is, the donor/landowner can sell her/his credit to someone else; the buyer can use the purchased tax credit, normally purchased at a discount from face value, against their own Colorado income tax.<ref>{{cite book|title=From Walden to Wall Street, Chapter 8|year=2005|publisher=Island Press|location=Washington, DC, USA|isbn=1-59726-029-0|pages=124–137|editor=James N. Levitt|chapter=8}}</ref> However, caps on the amount of credit an easement can generate, and other restrictions, limit the scope of some state tax credit programs.

In the states where credit for conservation land donations is transferable, free markets have arisen. Brokers assist landowners with excess credit to contact buyers, and the brokers often handle payments and paperwork to protect the principals, and to ensure that transfers are fully reported to the state tax authorities. The federal and state tax treatment of profits from sale and use of transferable tax credit have been the subject of extensive discussion and the issuance of several guidance documents by the Internal Revenue Service.<ref>[A comprehensive treatment of IRS views on state income tax credit transfers is contained within IRS AM 2007-002, issued 26Jan2007.]</ref>

The New Mexico state income tax credit was originated in 2003. New transferability legislation, effective January 1, 2008, applies retroactively to conservation easements effected from January 1, 2004.<ref>{{Cite web |url=http://www.nmcpr.state.nm.us/NMAC/parts/title03/03.013.0020.htm |title=3.13.20 NMAC |access-date=2008-07-11 |archive-date=2009-05-06 |archive-url=https://web.archive.org/web/20090506145921/http://www.nmcpr.state.nm.us/NMAC/parts/title03/03.013.0020.htm |url-status=dead }}</ref>

The Virginia transferable credit program is the largest among the States in dollar value of property conserved. By the end of 2010, $2,512,000,000 of property value had been donated as easements in Virginia for which tax credit was claimed.<ref>[For a comprehensive online treatment of the Virginia credit program, see: {{cite web |url=http://www.conservationfund.org/sites/default/files/The_Conservation_Fund_Chesapeake_Bay_Better_Models_for_Conservation_Chapt4_VA_State_Tax_Credit.pdf |title=Archived copy |access-date=2011-04-05 |url-status=dead |archive-url=https://web.archive.org/web/20110724194232/http://www.conservationfund.org/sites/default/files/The_Conservation_Fund_Chesapeake_Bay_Better_Models_for_Conservation_Chapt4_VA_State_Tax_Credit.pdf |archive-date=2011-07-24 }}]</ref> The qualifying easements cover over {{convert|516,000|acre|km2}} of Virginia landscape.<ref>[Virginia Department of Taxation, public presentations, Jan2011]</ref> The Virginia program now (2011) grants about $110 million of new tax credit each year. The credit allowance is 40% of the appraised value of the easement donation, so this equates to $275 million of property value donated per year for protection of wildlife habitat, farmland and woodland, and scenic open space—in perpetuity. The other state tax credit programs are smaller in dollar measurement, but are very significant in the area and the conservation values that they cause to be protected. The concept of state tax credit action (in the absence of a federal tax credit) that Philip Tabas and The Nature Conservancy promoted in the 1990s has borne remarkable fruit, and continues to expand today.