Terrain, Taxes, and Land Trusts: Saving the Florida Panther Through the Use of Conservation Easements
The Florida panther (puma concolor coryi), the official state animal of Florida, is the last remaining subspecies of “Puma” (also known as mountain lion or cougar) still surviving in the eastern United States. Extensive hunting devastated the population, and the Florida panther was one of the first species added to the U.S. endangered species list in 1973. By 1995, Florida panther populations dropped to less than 20 to 30 individuals in the wild and the Florida panther’s current status remains listed as endangered.
Historically, panthers were found throughout the southeastern U.S., including Arkansas, Louisiana, Mississippi, Alabama, Georgia, Florida, and parts of South Carolina. Although it is estimated that more than 200 panthers roam freely throughout Florida today, they are presently restricted to less than 5% of their historical range in a single breeding population in southern Florida. Habitat loss and habitat fragmentation continue to threaten the panther’s existence. The survival and recovery of the Florida panther are dependent upon maintaining, restoring, and expanding the panther population and its habitat in Florida and beyond.
Panthers are a wide-roaming species that require large, contiguous areas of suitable habitat to meet their social and reproductive needs. For panther population growth, they will need much more protected habitat than they currently use. The existing amount of habitat available to them on public lands is being encroached upon daily with development and is inadequate for the species to recover and be removed from the federal list of endangered or threatened species. The Florida panther currently roams on state and federal lands in South Florida, including the Florida Panther National Wildlife Refuge, the Big Cypress National Preserve, and the Audubon Corkscrew Swamp Sanctuary. But panther recovery goals cannot be met without establishing additional populations outside of these limited areas of southern Florida and this requires support from private landowners. The U.S. Fish and Wildlife Service specifically recognizes that public support and developing incentives for private landowners to retain and manage panther habitat are equally critical components to achieving panther recovery.
In 2008, the U.S. Fish and Wildlife Service established a Panther Recovery Plan, which aims for habitat for the panther to be conserved on both public and private lands throughout Florida. The plan identifies private rangelands in southwest and southcentral Florida that can provide vital habitat and prey for the Florida panther and can have a key role in conserving other native Florida species. Preservation of this land will allow panthers to safely migrate to the historic northern habitat they once roamed.
One of the most important and practical approaches to conserving panther habitat on private lands is the utilization of conservation easements. Florida’s private landowners can donate the developmental rights to a qualified conservation organization under a conservation easement — a voluntary, legal agreement between a private landowner and a governmental or nongovernment organization that then permanently restricts the development or use of land such as parks, wetlands, farmland, forest land, or historic structures to achieve certain conservation purposes in perpetuity. By placing the easement, some quality of the property is protected such as wildlife, habitat, open space, or forest management. Conservation easements have been an accepted and popular conservationist’s tool for decades, largely because of the substantial tax and economic benefits for easement donors. Since their launch more than 40 years ago, the use of conservation easements has become a critical component in protecting ecologically important lands and they can continue to be used as an important tool to save the Florida panther. By donating conservation easements on private land in Florida, landowners can continue to enjoy the land and save the Florida panther by providing necessary habitat for their expansion while receiving significant state and federal tax benefits.
Cat’s Meow: Conservation Easements Requirements
• Federal Definitions and Requirements for Deductibility — “Conservation easement” is the commonly used term for deductible easements granted for the preservation of 1) land areas for outdoor recreation by, or the education of, the general public; 2) protection of a relatively natural habitat of fish, wildlife or plants, or similar ecosystem; 3) preservation of open space (including farmland and forest land); or 4) preservation of a historically important land area or a certified historic structure. Conservation easements permanently restrict how land or buildings are used, and these restrictions on the property must be perpetual. To qualify for tax deductibility, donated conservation easements must be “legally binding, permanent restrictions on the use, modification, and development of property such as parks, wetlands, farmland, forest land, scenic areas, historic land or historic structures.”
A land trust is very often the charitable donee to which a landowner grants a conservation easement. The land is then subject to restrictions on its use and/or development. The land donor gives up certain rights as specified in a deed of easement but retains ownership of the underlying property. The specific terms in the deed of easement will control the breadth of the donee organization’s rights. The charitable organization then has an interest in the encumbered property that runs with the land, meaning that current and future landowners of the property are bound by the terms and restrictions in the deed of easement.
With respect to tax deductibility, the general rule is that no charitable contribution deduction is allowed for a transfer of property of less than the taxpayer’s entire interest in the property. But §170(f)(3)(B)(iii) provides an exception to the partial interest rule for contributions of “qualified conservation easements.” Internal Revenue Code §170(h) states that a qualified conservation contribution is a contribution of 1) a qualified real property interest; 2) where the donee is a qualified organization; and where 3) the contribution is exclusively for conservation purposes.
1) Qualified Real Property Interest: A qualified real property interest includes, among other things, a restriction granted in perpetuity on the use that may be made of the real property (often referred to as a conservation easement). Section 170(h)(2)(C) requires that the interest in real property be subject to a use restriction granted in perpetuity, and §170(h)(5)(A) requires that the conservation purpose be protected in perpetuity.
The perpetuity of conservation purpose requirement is meant to prevent taxpayers from trading a use restriction for a current tax deduction and then removing the restriction if it becomes inconvenient. The perpetuity requirement has been a major source of conservation easement litigation. For example, in Carpenter v. Commissioner, T.C. Memo. 2012-1 (2012), a conservation easement was determined “not enforceable in perpetuity” because it allowed for the extinguishment of the easement by mutual consent of the parties if circumstances arose in the future that would render the purpose of the conservation easement impossible to accomplish. After Carpenter, the Tax Court in Grave v. Commissioner, 140 T.C. 377 (2013), disallowed a charitable deduction because the charity to which the easement had been donated provided the taxpayers with a side letter, stating that if their deduction was disallowed, the charity would return the donation. The Tax Court held that the donation was, accordingly, a conditional, nondeductible gift. Then, in Belk v. Commissioner, 140 T.C. 1 (2014), aff’d 774 F. 3d 221 (4th Cir. 2014), the Tax Court again disallowed the charitable deduction because the easement was not a restriction granted in perpetuity. The deed of easement allowed the taxpayers and donee to change the property subject to the easement by swapping other property owned by the taxpayer.
Another source of litigation stemming from the perpetual duration requirement is related to the timely recordation of easement deeds and the subordination of pre-existing mortgages. These cases contain a common warning. If the property has a mortgage or lien in effect at the time the easement is recorded, the easement contribution is not deductible unless the mortgage or lien holder subordinates its rights to the donee organization. In addition, the subordination agreement must be recorded at the time that the deed of easement is recorded.
2) Donee Qualified Organization: A qualified organization generally consists of a governmental unit or charitable organization that is an eligible donee for such contributions because it has a commitment to protect the conservation purposes of the donation and has the resources to enforce the restrictions. Qualified organizations include the federal government; a U.S. possession; the District of Columbia; a state government; any political subdivision of a state or U.S. possession; an organization described in I.R.C. §170(b)(1)(A)(vi); a charity described in I.R.C §501(c)(3) that meets the public support test of I.R.C. §509(a)(2); or a §501(c)(3) organization that meets the requirements of §509(a)(3) and is controlled by one of the organizations described above.
3) Exclusively for Conservation Purposes: Seldom at issue is the requirement that the contribution be made to a qualified organization. Conversely, the “exclusively for conservation purposes” requirement has been a common subject of conservation easement controversy. A contribution is considered to be made “exclusively for conservation purposes” if the conservation purpose is protected in perpetuity and it 1) preserves land for the general public’s outdoor recreation or education; 2) protects a relatively natural habitat of fish, wildlife or plants, or similar ecosystem (the natural habitat requirement); 3) preserves open space either for the scenic enjoyment of the general public or pursuant to a federal, state, or local governmental conservation policy and yields a significant public benefit (the open space requirement); or 4) preserves a historically important land area or a certified historic structure (the historic preservation requirement).
The interpretation of I.R.C. §170(h)(4)(A) was at issue in Glass v. Comm’r, 471 F. 3d 698 (6th Cir. 2006), aff’g 124 T.C. 258 (2005). Here, the taxpayers donated two easements over a portion of their 10-acre vacation home property, along the shoreline of Lake Michigan. The Internal Revenue Service issued the taxpayers several notices of deficiency for multiple tax years and asserted that taxpayers were not entitled to the deductions because they did not qualify as “qualified conservation contributions” within the meaning of I.R.C. §§170(h), (h)(4)(A), and (h)(1)(C).
The IRS asserted that the easement was not “exclusively for conservation purposes” because it neither protected a relatively natural habitat of wildlife or plants nor preserved open space. In defense of the contributed easements, taxpayers offered testimony that the shoreline was a famous roosting spot for piping plovers, bald eagles, and kingfishers and was suitable to foster growth of Lake Huron tansy and pitcher’s thistle — a species of plants that are considered to be threatened and require undisturbed habitats to survive. The Tax Court agreed with the taxpayers and determined that the shoreline of Lake Michigan constituted a “relatively natural habitat” for those species, and, therefore, held that the easement was contributed for a conservation purpose.
But on appeal to the Sixth Circuit, the IRS argued that, even if Lake Huron tansy, pitcher’s thistle, or bald eagles inhabit the encumbered property, the terms of the 1992 and 1993 conservation easements undermine their stated conservation purpose because the encumbered property was too small, taxpayers’ reserved rights were too great, and there is no limit on building on neighboring properties. The Sixth Circuit disagreed and pointed out that there is no minimum size requirement for a qualifying conservation easement contribution. The court explained that “it is not the size of the conservation easement that matters; instead, it is whether any retained use contributed for a conservation purpose.”
• Florida Definitions and Requirements for Deductibility —
To determine whether the conservation easement deeds comply with requirements for the conservation easement deduction under [f]ederal tax law, we must look to [s]tate law to determine the effect of the deeds. State law determines the nature of the property rights, and [f]ederal law determines the appropriate tax treatment of those rights.
F.S. §704.06(2) adopts much of the language and themes of its federal law counterparts and provides that, “Conservation easements are perpetual, undivided interests in property and may be created or stated in the form of a restriction, easement, covenant, or condition in any deed, will, or other instrument executed by or on behalf of the owner of the property….” In order to be acquired by any governmental body, agency, or charitable trust, F.S. §704.06(3) requires that the conservation easement must serve the conservation purpose of “protecting natural, scenic, or open space values of real property, assuring its availability for agricultural, forest, recreational, or open space use, protecting natural resources, maintaining or enhancing air or water quality, or preserving sites or properties of historical, architectural, archaeological, or cultural significance.”
Conservation easements in Florida are not limited to the preservation of land only in its natural state or only to protect an endangered or threatened species. The statutory language of F.S. §704.06(1) explains that Florida conservation easements may also be utilized to “maintain the existing land uses” where other uses of land are prohibited or limited. Land uses that are maintained under this statutory provision must be limited to exclude activities such as construction, placing of buildings, dumping of soil or trash as a landfill, removal of trees, dredging, excavation, activities detrimental to erosion control, or acts generally detrimental to the preservation of sites or properties of historical, architectural, archaeological, or cultural significance.
Usually, in Florida, conservation easements are assignable, enforceable, run with the land,  and are binding on all subsequent owners of the servient estate. An owner of property encumbered by a conservation easement must abide by the requirements of marketable title to preserve the conservation easement in perpetuity.
As is the case for most conservation easements around the country, a Florida conservation easement may risk being terminated if there is a pre-existing, unsubordinated mortgage on the land. A subordination agreement from a mortgagee is a resolution to this issue, as discussed previously in this article, to assure that the conservation easement will not be terminated if the mortgage is foreclosed. The mortgagee can agree that the mortgage will be subordinated to the conservation easement interest and in doing so waives the right to terminate the conservation easement if the mortgage on the property is ever foreclosed.
Notably, allowing public access on the property is not necessary for a conservation easement in Florida, even where the easement is granted to a governmental body, and particularly if the easement is protecting significant wildlife or plant habitats, open space, or agricultural lands. “Although not necessary, most conservation easement instruments still specifically state that no rights are granted to the public in general and no public access is allowed.” Public access may only be required if the primary conservation value of the property is public recreation or education. But in order to receive an income tax deduction using the historic preservation resource category, the property must be accessible to the public. Although, accessibility to the public “can be as simple as maintaining visibility from the right of way of a property, or in the case of an interior easement, opening the building up for tours.”
Fat Cat: Federal and Florida Tax Benefits of Conservation Easements
As of the data available from September 30, 2015, statewide in Florida there are approximately 1,102,057 acres designated as conservation easement lands. There are many things to take into consideration when a landowner decides whether to encumber developmental and other rights on their property through the use of a conservation easement. Besides the significant environmental benefits to Florida land and wildlife, the economic and tax implications of donating conservation easements are an important aspect.
For purposes of this article, tax considerations are categorized as either income taxes (federal and state), estate taxes (federal and state), or property taxes. This article does not cover state personal income tax or state inheritance tax since Florida does not have these taxes. Landowners who donate a conservation easement may be entitled to federal income tax benefits, federal estate tax benefits, and/or state tax benefits. These tax benefits are only permitted for “qualifying conservation contributions” under applicable state and federal statutes.
• Federal Income Tax Benefits — Taxpayers may be able to take a charitable deduction against income when they donate a conservation easement. I.R.C. §170(a)(1) allows a deduction, subject to certain limitations and restrictions, for any charitable contribution (as defined in §170(c)) that is made within the taxable year. For contributions of real estate, the year of the deduction is the year in which the real estate is transferred under the law of the state where the real estate is located. However, for conservation easements, the year of the deduction is the year of recordation. Generally, to be deductible as a charitable contribution under §170, a transfer to a charitable organization must be a gift of money or property without the receipt or expectation of adequate consideration, made with charitable intent. To be deductible, donated conservation easement must include legally binding, permanent restrictions on the use, modification and development of property such as parks, wetlands, farmland, forest land, scenic areas, historic land, or historic structures. The restrictions on the use of the property must be in perpetuity. As already discussed in this article, current and future holders of the easement and owners of the underlying property must all be bound by the terms of the conservation easement deed.
After the donation of a qualifying conservation easement, the fair market value of the easement (at the time of contribution) may be deducted on the donor’s federal income tax returns. As a general rule, the fair market value of the easement and the amount of the allowable tax deduction is determined by a substantial record of sales of conservation easements comparable to the donated easement. If no such substantial record of market-place sales is available, the value is generally the difference between the fair market value of the underlying property before and after the easement is granted to the donee. This can be determined by an appraisal of the land without the easement and an appraisal of the land with the easement.  The diminution in value as a result of the easement is the amount of the charitable deduction. Because there is usually no substantial record of comparable sales, a before and after valuation is used in most cases.
In general, taxpayers can carry over unused charitable contributions for up to five years. For conservation easements, the carryover period is 15 years. An individual may deduct a qualified conservation easement contribution up to 50% of the individual’s contribution base. There is a special rule for qualified farmers and ranchers allowing 100% of the contribution base.
Finally, regarding deductibility, the IRS will likely challenge the deductibility of a contributed easement that does not place restrictions on the property that go beyond those of existing local ordinances and law. For example, in 1982 East, LLC, T.C. Memo 2001-84 (2010), the Tax Court held the easement failed to satisfy I.R.C. §170(h)(4) because of local law and the rules of the landmarks preservation commission, not the actual easement that preserved the subject property. Additionally, when the land subject to the easement is held in trust, it may be more difficult to take a deduction for the contributed conservation easement. If the trust at issue is not a grantor trust, the charitable deduction will not flow through to the beneficiaries. The trust itself may take the charitable deduction, but only to the extent that it meets the more stringent requirements of I.R.C. §642(c).
• Florida Property Tax Benefits — There are several significant tax incentives for donating a conservation easement in Florida. First, an easement diminishes the opportunity for development of the property, which likely leads to a reduction in its fair market value. State and local law, as well as the tax assessment of the subject property, will be controlling, but the reduction in fair market value from the placement of the easement may result in a reduction in property taxes. F.S. §§193.051 and 193.503 require property appraisers to recognize the reduced market value of eased property.
In addition, F.S. §196.26(2) provides that land dedicated in perpetuity for conservation purposes and used exclusively for conservation purposes is exempt from ad valorem taxation. In Florida, meeting the “conservation purpose exclusive use requirement” does not “preclude the receipt of income from activities that are consistent with a management plan when the income is used to implement and maintain the management plan.” As a result, land can be exempt from ad valorem taxes even where the land is generating income as long as it is in compliance with the requirements of F.S. §196.26.
• Federal Estate Tax Benefits — In certain trust and estate scenarios, children or grandchildren may inherit land from their families but, due to a lack of liquidity, will be unable to pay the estate taxes of the inherited property and end up being forced to sell it. Conservation easements may provide an avenue for families to protect their land without giving up ownership of the property. By placing an easement on the land that restricts its future development potential, it would naturally follow that the property’s overall value and subsequently the value of the gross estate and so then the estate tax burden will be reduced.
Further, if property included in an estate is subject to a “qualified conservation easement,” I.R.C. §2031(c) allows up to 40% of the value of the eased property to be excluded from the value of gross estate for estate tax purposes. The gross estate exclusion amount is currently limited to $500,000. Therefore, it may be possible for the estate to get a financial benefit from both the diminished value of the property after the contribution of the easement and an exclusion from the value of the retained property as a product of creating the conservation easement.
Notably, if landowners do not wish to restrict their own use of the land, they can still reduce their estate taxes for their beneficiaries by donating a conservation easement on the property through their will.
Nine Lives: The Future of Florida Panther Preservation through Conservation Easements
The panther’s habitat extends along lonely pathways through much of rural Southwest Florida — Glades, Hendry and Okeechobee counties included — up into the center of the state. Florida, federal, and private wildlife agencies and organizations have made great strides in working to protect parts of it from development with public preserve land purchases and wildlife conservation easements across private farms, groves, ranches and other properties spanning those and nearby counties….
As Florida’s population continues to grow, protecting vulnerable natural resources is more essential than ever. Habitat loss is still the biggest threat to the Florida panther. Large areas of natural habitat are being encroached upon by human population growth or agricultural purposes. Male panthers typically defend territories of 200 square miles and a single female will establish a home range of 75 square miles. Simply put, the current habitat available for the Florida panther is “too small and fragmented for the population to grow to a healthy and sustainable level.”
Florida should continue to embrace conservation easements and create incentives for landowners to utilize them. They are a vital component of conservation efforts and an important land protection tool. Recovery efforts that include the use of conservation easements throughout the Florida Wildlife Corridor — a mix of public and private lands that strings its way throughout the state — has successfully contributed to a significant increase in the panther population. Although the only confirmed breeding population of panthers remains south of the Caloosahatchee River, in November 2016, the Florida Fish and Wildlife Conservation Commission Panther Team collected strong evidence of a female Florida panther north of the river. This was some of the first evidence of a wild female panther north of the river since 1973, making this outstanding news for the Florida panther. To expand their range and survive long-term, these big cats will need millions of acres of habitat to the north.
Conservation easements are essential for Florida to ensure protection of the panther’s natural habitat and critical to the environmental future of our state. Today, conservation easements are “an established presence in the wetland landscapes of Florida with easements being granted to and enforced by federal, state, and local government agencies, land trusts and private conservation organizations, homeowners associations, and corporate entities.” Conservation easements, when properly implemented, provide an opportunity for landowners to gain substantial charitable deductions while helping to conserve land for environmental and conservation purposes. Conservation easements are a win-win for both landowners and Florida wildlife like panthers. They provide for environmental protection, tax benefits to the landowners, and ensure economically efficient means to protect natural habitats in Florida for generations of future panthers to come.
 Throughout this article, the Florida panther is referred to as “panther.”
 National Wildlife Federation, Florida Panther, https://www.nwf.org/Educational-Resources/Wildlife-Guide/Mammals/Florida-Panther.
 Nick Wesdock, Conservation Easement Secures Florida Panther Habitat, The Wildlife Society (June 17, 2015), https://wildlife.org/conservation-easement-secures-florida-panther-habitat/.
 U.S. Fish and Wildlife Service, Florida Panther, National Wildlife Refuge, https://www.fws.gov/refuge/florida_panther/wah/panther.html.
 Naples Zoo Conservation Fund, Florida’s Feline: A Southern Survivor’s Rising Numbers, https://www.thefloridapanther.org/about-panthers.html, citing to the Florida Panther Population Report at myfwc.com (“While this is a commonly cited number, it’s important to understand that the U.S. Fish and Wildlife Service and the Florida Fish and Wildlife Conservation Commission openly state this figure is…the best available using the techniques available with this species that is so challenging to count.”); see also FWS, Florida Panther.
 U.S. Fish and Wildlife Service, Florida Panther Recovery Plan (3d Revision, Nov. 1, 2008), available at https://www.fws.gov/uploadedFiles/Panther%20Recovery%20Plan.pdf.
 See id. FWS, Florida Panther.
 See Elizabeth F. Pienaar & Melissa M. Kreye, Government Efforts to Protect Habitat for the Panther on Private Lands, UF IFAS Extension (Sept. 2016), available at https://edis.ifas.ufl.edu/uw413. See also Florida Panther Recovery Plan (“The current Recovery Plan establishes that the service will consider delisting the panther when three populations of at least 240 individuals each have been established and sufficient habitat to support these populations is secured.”).
 Id. Pienaar & Kreye, Government Efforts to Protect Habitat for the Panther on Private Lands.
 U.S. Fish and Wildlife Service, Florida Panther, https://www.fws.gov/southeast/wildlife/mammals/florida-panther/.
 See Florida Panther Recovery Plan. See also FWS, Florida Panther.
 Id. Florida Panther Recovery Plan.
 Pienaar & Kreye, Government Efforts to Protect Habitat for the Panther on Private Lands.
 I.R.C. §170(h).
 See generally Adam Looney, Estimating the Rising Cost of a Surprising Tax Shelter, The Syndicated Conservation Easement, Brookings (Dec. 20, 2017), available at https://www.brookings.edu/blog/up-front/2017/12/20/estimating-the-rising-cost-of-a-surprising-tax-shelter-the-syndicated-conservation-easement/.
 The thesis of this paper was largely inspired by the work of Carlton Ward, Jr. See generally Carlton Ward Photography, carltonward.com, after the author saw a presentation of his in 2017 about preserving wild Florida.
 See I.R.S., Conservation Easement Audit Techniques Guide (Jan. 24, 2018), available at https://www.irs.gov/pub/irs-utl/conservation_easement.pdf.
 See Oakbrook Land Holdings LLC v. Commissioner, T.C. Memo 2020-54 (May 12, 2020) (Conservation easement a taxpayer granted did not satisfy the “protected in perpetuity” requirement of I.R.C. §170(h)(5)(A) and Treas. Reg. §1.170A-14(g)(6). Taxpayer purchased 143 acres of land in December 2007 for $1.7 million and one year later donated an easement over a portion of the land and took a charitable contribution for $9.5 million. Upon sale, the deed would divide the proceeds of sale following a judicial extinguishment of the easement. On audit, the IRS disallowed the deduction in full. The regulation requires that the donee be entitled to a proportionate share of the proceeds, not to a fixed dollar amount keyed to the easement’s initial value and does not permit a reduction of the donee’s proceeds on account of improvements made by the donor, the court noted. The extinguishment clause would split the proceeds from the property’s condemnation or the easement’s termination in a way that failed to protect the contribution’s conservation purpose in perpetuity, the court concluded.).
 I.R.S., Conservation Easement Audit Techniques Guide.
 Treas. Reg. §1.170A-14(g)(1) (“Easement deed: Describes the conservation purpose(s), restrictions, and permissible use of the property. To be effective it must contain legally binding restrictions enforceable by the donee organization. Enforceable, e.g., by recordation in land records of the jurisdiction where the property is located.”).
 I.R.C. §170(f)(3).
 I.R.S., Conservation Easement Audit Techniques Guide.
 Sections 170(h)(1), (2), (3), and (4); §1.170A-14(a).
 I.R.C. §170(h)(2). See, e.g., Hoffman Properties II, LP v. Commissioner, No. 19-1831 (6th Cir. Apr. 14, 2020) (Charitable easement donation fails to satisfy the “in perpetuity” requirement when it empowers the donor to make harmful changes to the donation whenever the donee fails to act within 45 days of the proposed change.).
 See also Treas. Reg. §1.170A-14(b)(2), (g).
 I.R.S., Conservation Easement Audit Techniques Guide.
 In Belk, the taxpayers contributed a conservation easement over a 184-acre golf course. They claimed a charitable deduction of $10,524,000. One of the taxpayers’ reserved the right to swap land in and out of the easement. The IRS proposed disallowance of the deduction because the taxpayers could change what property was subject to the conservation easement. The IRS argued that the use restriction was not granted in perpetuity and, thus, the taxpayers did not contribute a qualified real property interest. The court agreed with the IRS and determined that the use restriction must attach to the same property subject to the original easement rather than any or some other, interchangeable parcel. See Micah G. Fogarty, Navigating IRS Challenges to Conservation Easements, 90 Fla. B. J. 52 (Jul./Aug. 2016); see also generally Anson H. Asbury, Understanding the Conservation Easement Tax Deduction, The Federal Lawyer (Mar. 2016).
 See, i.e., Gorra v. Commissioner, T.C. Memo. 2013-254; see Zarlengo v. Commissioner, T.C. Memo., 2014-161 (Conservation deeds are not the only documents subject to timely recordation to protect a conservation purpose in perpetuity. The regulations require that any mortgages on the encumbered property must be subordinated to the easement to protect the conservation purpose. If those documents are not recorded at the time of the donation, the gift will not meet the perpetual conservation purpose requirement.).
 Treas. Reg. §1.170A-14(g)(2). See, e.g., in Minnick v. Commissioner, T.C. Memo. 2012-345, aff’d. 796 F. 3d 1156 (9th Cir. 2015), the courts held that any prior mortgage on the land must be subordinated at the time of the gift of the conservation easement. Since that was not the situation, the charitable deduction was disallowed; see also Asbury, Understanding the Conservation Easement Tax Deduction.
 I.R.C. §170(h)(3); see, e.g., PLR 201405018 (Jan. 31, 2014) (proposed revocation of exempt status of organization that applied for exempt status with the stated purpose of accepting, holding and enforcing conservation easements).
 Treas. Reg. §170A-14(c)(1). The organization need not set aside funds to enforce the restrictions that are the subject of the contribution. Id.; I.R.C. §§170(h)(1)(B), 170(h)(3), Treas. Reg. §1.170A-14(c)(1).
 I.R.S., Conservation Easement Audit Guide; see also §1.170A-14(c)(1) for the requirements to qualify as an eligible donee.
 See Fogarty, Navigating IRS Challenges to Conservation Easements.
 See, e.g., Dumaine Farms, Dumaine Farms v. Commissioner of Internal Revenue, 73 T.C. 650 (1980) (the U.S. Tax Court held that a perpetual, irrevocable trust organized to operate an experimental model demonstration farm that conducted large-scale research projects was “operated exclusively for scientific and educational purposes within §501(c)(3).” The purpose of the working farm was to improve the quality of farming to demonstrate that farming can be profitable while maintaining sound ecological principles and native wildlife. The farmland did not have any special environmental attributes nor was it ecologically significant. The organization still intended to sell the produce and timber grown on the land in the usual farm markets, with the proceeds to be used to cover operating costs and pay for the experimental projects available to the general public. Providing benefits to the public that predominated over benefits to private persons was critical in obtaining exempt status.).
 I.R.C. §170(h)(4)(A).
 Id.; see also PLR 8546112 (The Sixth Circuit noted that the IRS allowed a deduction for a conservation easement over a three-quarter acre parcel of land.) For further in-depth discussion on conservation easement controversy, see generally Fogarty, Navigating IRS Challenges to Conservation Easements.
 Wachter v. Comm’r, 142 T.C. 140 (2014); see also Carpenter, T.C. Memo. 2012-1.
 Fla. Stat. §704.06(2), (3); see Susan Roeder Martin, Conservation Easements, A Benefit to the Environment and the Landowner, 89 Fla. B. J. 91 (June 2015) (“Florida statutes also allows conservation easements to be created through less common methods, such as restrictive covenants, conditions in a deed, or restrictive language in an order of taking.”).
 Fla. Stat. §704.06(1).
 See Fla. Stat. §704.06(1)(a)-(h); Fla. Stat. §704.06(13) also provides that a conservation easement agreement may include provisions that “allow agricultural activities, including,…silviculture, forestry management, and livestock grazing, if such activity is a current or historic use of the land placed under the easement. If such agricultural activities take place they must be allowed under the terms of the agreement.” See Martin, Conservation Easements, A Benefit to the Environment and the Landowner.
 Fla. Stat. §704.06(4).
 Id. See also Tracy Bateman Farrell, J.D., Easements and Licenses in Real Property, 20 Fla. Jur. 2d Easements §10 (Mar. 2020).
 Fla. Stat. §704.06(12); Farrell, Easements and Licenses in Real Property.
 See Cheryl A. Denton, Conservation Easements in Florida: Do Unsubordinated Mortgages Pose A Threat? 70 Fla. B. J. 50 (Apr. 1996).
 Id.; see also United States v. Roberts, 788 F. Supp. 555 (S.D. Fla. 1991) (Federal court interpreting Florida law considered the issue of the effect of mortgage foreclosure on an easement. The only dispute was whether the “easement created over lands subject to a mortgage has priority or survives the foreclosure of the mortgage by the mortgagee.” The court held that the principle of “first in time, first in right” applied to terminate an easement by foreclosure of a mortgage that had been previously executed and recorded.).
 Martin, Conservation Easements, A Benefit to the Environment and the Landowner.
 Treas. Reg. §1.170A-14(d)(4)(ii)(B).
 See Florida Dept. of State, Bureau of Archaeological Research Division of Historical Resources, Conservation Easements: Protecting Archaeological Sites and Historic Buildings on Private Lands, available at https://dos.myflorida.com/media/30910/easement.pdf.
 U.S. Fish and Wildlife Service, A Unified Conservation Easement Mapping and Database for the State of Florida, (Oct. 30, 2015), available at https://www.fws.gov/VeroBeach/FloridaPantherTransportation/20160128AUnifiedConservationEasementMapping.pdf.
 Chris Demers & Douglas R. Carter, Conservation Easements: Options for Preserving Current Land Uses, Publication #SS-FOR-21, UF IFAS Extension (Jan. 2004), available at https://edis.ifas.ufl.edu/fr149.
 See id.; I.R.C. §170(h).
 See generally Adam Looney, Charitable Contributions of Conservation Easements, Brookings, available at https://www.irs.gov/pub/irs-soi/17resconlooney.pdf.
 I.R.S., Conservation Easement Audit Techniques Guide.
 See, e.g., U.S. v. American Bar Endowment, 477 U.S. 105, 117-118 (1986); Hernandez v. Commissioner, 490 U.S. 680, 690 (1989); See also Treas. Reg. §1.170A-1(h)(1) and (2).
 See note 56.
 Treas. Reg. §170A-14(h)(3)(i); see Treas. Reg. §1.170A-1(c)(1).
 See, e.g., Palmer Ranch Holdings, Ltd. v. Commissioner, 812 F.3d 982 (11th Cir. 2015) (Generally, the fair market value of a conservation easement is based on the sales price of comparable easements if there is a substantial record of sales of comparable easements. Otherwise, the fair market value of a perpetual conservation restriction is generally equal to the difference between the fair market value of the property before the granting of the restriction and the fair market value of the property after the granting of the restriction.).
 See Koren, Qualified Conservation Contributions (Easements), 1 Est. Tax & Pers. Fin. Plan. §12:88 referencing Ltr. Rul. 200836014. “Although the Tax Court approved, in 2014, a $20 million charitable deduction for a conservation easement on an 80-acre Florida ranch, the Eleventh Circuit reversed. The Court of Appeals said the value of the underlying property (as opposed to the value of the easement) is important, because the taxpayer used the ‘before and after’ valuation method. Accordingly, Regulation §1.170A-14(h)(3)(ii) requires taking into account not only the current use of the property, but also an assessment of the likelihood that, absent the conservation restriction, the property would be developed (i.e., its ‘highest and best use’).”
 Treas. Reg. §1.170A-14(h)(3)(i); see also Brannan Sand & Gravel Co., LLC v. Commissioner, T.C. Memo. 2020-76 (June 4, 2020) (Charitable contribution of property denied for failing to prove the fair market value of the property at the time of the contribution. Taxpayer in partnership with another entity engaged in a transaction to contribute a water rights easement to a state agency. Taxpayer valued the contribution at $200,000 based on an attorney’s valuation due to his litigating similar transactions that valued acreage at a certain dollar amount. The court denied the deduction due to the taxpayer failing to submit a completed Form 8283 and the court considered the appraisal to be an opinion not based on factual evidence.).
 Beware if when, for your investment, the deductions are high compared to the cost of the investment — there is a concern of tax shelter issue from IRS point of view. For support, see IRS Notice 2017-10 (issued Dec. 23, 2016), which identified certain syndicated conservation easements as listed transactions. See IRS Notice 2017-10 (highlighting particularly egregious syndicated easement transactions as “listed transactions” and noting a key element of an egregious deduction to a partner of more than 2.5 times the partner’s investment); see also IRS Notice 2004-41; see generally Looney, Estimating the Rising Cost of a Surprising Tax Shelter.
 I.R.C. §170(d)(1).
 I.R.C. §170(b)(1)(E)(ii). The Department of Treasury repeatedly has supported renewal of the acceleration deduction preference for conservation contributions in its annual revenue proposals. Dept. of Treasury, General Explanations of the Administration’s Fiscal Year 2016 Revenue Proposals (Feb. 2015), available at www.treasury.gov/resource-center/tax-policy/Pages/general_explanation.aspx.
 I.R.C. §170(b)(1)(E)(i); see Stephen Rothander, et al., Introduction to Conservation Easements: Statutory Requirements & Qualified Conservation Contribution, IRS (Jan. 2020), available at https://www.irs.gov/pub/irs-utl/introduction-to-conservation-easements.pdf (“Contribution base of an individual is generally adjusted gross income. §170(b)(1)(G).”).
 I.R.C. §170(b)(1)(E)(iv).
 Michael I. Sanders, Joint Ventures Involving Tax-Exempt Organizations, Conservation and Environmental Protection, Ch. 16.2 at 1208-10 (4th ed. 2013).
 Compare with the IRS position in Private Letter Ruling 200208019 (Feb. 22, 2002) in which the IRS privately ruled that a grant of a conservation easement by an LLC taxed as a partnership, encumbering property owned by the LLC, would be a qualified conservation easement, and that each member of the LLC may claim a charitable deduction for the member’s share of the conservation easement deduction.
 See I.R.S. Memo. 2010-42023; see also I.R.S. Rev. Rul. 2003-123 (which denies a §642(c) deduction for the contribution of a conservation easement on property owned by the trust since its inception). Under I.R.C. §642(c), a trust is allowed a deduction for a charitable contribution only if three requirements are met: 1) Qualify as charitable under §170; 2) be authorized by the terms of the trust; and 3) be made out of the gross income of the trust. It is not clear whether a conservation easement could really be made out of the “gross income” of a trust); see, e.g., W. K. Frank Trust of 1931 v. Commissioner, 145 F.2d 411 (3d Cir. 1944).
 Fla. Stat. §196.26(1)(d). According to the statute, land that is “dedicated in perpetuity” is “land encumbered by an irrevocable, perpetual conservation easement.”
 Fla. Stat. §196.26(2). Martin, Conservation Easements, A Benefit to the Environment and the Landowner.
 Fla. Stat. §196.26(2).
See Florida Dept. of State, Division of Historical Resources, Tax Benefits for Conveying Conservation Easements, https://dos.myflorida.com/historical/archaeology/cultural-resource-protection/conservation-easements/tax-benefits/. See Demers & Carter, Conservation Easements: Options for Preserving Current Land Uses.
 See id.; I.R.C. §2031(c).
 I.R.C. §2031(c)(1).
 26 U.S.C. §2031(c)(9) (“Treatment of easements granted after death. — In any case in which the qualified conservation easement is granted after the date of the decedent’s death and on or before the due date (including extensions) for filing the return of tax imposed by I.R.C. §2001, the deduction under I.R.C. §2055(f) with respect to such easement shall be allowed to the estate but only if no charitable deduction is allowed under chapter 1 to any person with respect to the grant of such easement.”). See also TAM 8204020 (Oct. 22, 1981).
 Chris Felker, Seeing Elusive Florida Panther Akin to Seeing a Ghost, Immokaleebulletin.com (Dec. 9, 2019), https://immokaleebulletin.com/human-interest/seeing-elusive-florida-panther-akin-to-seeing-a-ghost/.
 Randy Kautz, et al., How Much Is Enough? Landscape-Scale Conservation for the Florida Panther, Biological Conservation at 130,118-133 (2006).
 See generally Florida Fish and Wildlife Conservation Commission, Florida Panther: Habitat, https://myfwc.com/wildlifehabitats/profiles/mammals/land/florida-panther/.
 The Nature Conservancy, Why Is Panther Habitat Expansion So Critical?,nature.org/panther. See also Kautz, et al., How Much is Enough? Landscape-scale Conservation for the Florida Panther.
 Douglas Main, Planned Roads Could Imperil Florida’s Panther — and Last Remaining Wilderness, National Geographic (Aug. 26, 2019), available at https://www.nationalgeographic.com/animals/2019/08/florida-toll-road-threatens-wildlife-panthers/#close; see also FWS, Florida Panther.
 See also U.S. Fish and Wildlife Service, Florida Panther, https://www.fws.gov/southeast/wildlife/mammals/florida-panther/; Main, Planned Roads Could Imperil Florida’s Panther.
 Id.; see note 80 (“The most important conservation action that could be taken for the Dispersal Zone is to secure it as a public conservation area using fee-simple acquisition or the purchase of conservation easements. Most of the Dispersal Zone is privately owned; however, 11% has been placed under publicly funded conservation easements….”).
 See note 50.
This column is submitted on behalf of the Real Property, Probate and Trust Law Section, William Thomas Hennessey III, chair, and Douglas G. Christy and Jeff Goethe, editors.