A taxpayer’s attempted donation of a conservation easement that qualified for a deduction under IRC §170(h) was found not to meet the requirement that the easement was “protected in perpetuity” in the case of Railroad Holdings, LLC v. Commissioner, TC Memo 2020-22.[1]  The problem arose from a clause that detailed what would happen if the easement were extinguished due to judicial proceedings.

IRC §170(h) provides a charitable contribution deduction for contributions of conservation easements that meet certain requirements.  One of these, found at IRC §170(h)(5)(A), is that the conservation purpose must be protected in perpetuity.