“Had I known it would take 16 years I probably wouldn’t have done it,” said Rock Ringling of Montana Land Reliance and President ofthe Partnership of Rangeland Trusts (PORT). But conservation-minded ranchers across the country are glad he did. It’s what Land Trust Alliance President Rand Wentworth called “[…] the single greatest legislative action in decades to support land conservation.” It’s the permanent extension of Rock Ringling and fellow Montanan Bill Long’s brainchild, the Enhanced Easement Incentive Act.
The Protecting Americans from Tax Hikes (PATH) Act passed on Dec. 18, 2015, making the Enhanced Easement Incentive Act a permanent part of the tax code. Prior to the passing of the Enhanced Easement Incentive Act in 2006, land-rich, cash-poor ranchers could never make enough deductions to realize the full value of their donation. That’s where Ringling and Long came in. The tax incentives they proposed would help qualified ranchers to recover their donation value so that placing an easement on their ranches, if it worked for their family, would make business sense as well as heart sense.
“Ranchers and ranch land trusts scored a major victory in working together to secure permanency for this tax incentive,” said Bethany Erb, Western Advocacy and Outreach Manager at Land Trust Alliance. “We no longer have to worry about Congress renewing it every one or two years. Landowners now have the assurance they need to make their long-term estate plans. State cattlemen’s associations and NCBA have long helped us make an effective case to Congress. And this year, that case was won.”
The Act allows ranchers to deduct up to 100 percent of their adjusted gross income for up to 16 years, or until the full value of their donation is recouped, whichever occurred first. While those with significant positive cash flow have always been able to regain the lost value of a donated conservation easement, it only became a viable option for ranchers in 2006. Other landowners benefit from this legislation as well. For donations of land not in agriculture production, allowed deductions are up to 50 percent over 15 years. Bargain sales are included as well so that landowners can deduct the difference between the appraised value of the conservation easement and sale price should they choose to sell at a “bargain.”
As a result of the original Act in 2006, donations of conservation easements immediately increased 33 percent. Over two million acres across the country were conserved because of this legislation. But the Incentive has been in a constant state of flux, continually expiring and being renewed. Because donating an easement can take the better part of a year or more, the process was filled with uncertainty. Now that the Incentive is permanent, ranchers have a clear-cut decision making mechanism in place.
The recent passage and permanence of the tax incentive was largely due to the tireless lobbying efforts of the Land Trust Alliance which represents more than 1,100 member land trusts and five million members. Individual land trusts, conservation groups, sportsmen’s associations, historical preservation societies and cattlemen’s associations joined forces to put pressure on their elected representatives as well.
In addition, PORT, whose members hold more than 1,283 conservation easements on nearly 2.2 million acres, was heavily involved. PORT is composed of seven cattlemen’s land trusts, including the California Rangeland Trust, that are affiliated with their state’s livestock associations. The unique agricultural perspective of PORT member land trusts assures ranchers that their goals are not only understood, but are shared by the land trust with whom they partner.
According to Nita Vail, chief executive officer of the California Rangeland Trust and PORT Vice President, 61,395 acres of rangeland under conservation easements have been donated to the California Rangeland Trust as a direct result of the Enhanced Easement Incentive Act since 2006.
When President Obama signed PATH into law Dec. 18, 2015, conservation tax incentives became permanent as well as retroactive to Jan.1, 2015.
Justin Oldfield, vice president of government affairs for the California Cattlemen’s Association said, “The strong bipartisan support given by the majority of California’s congressional delegation to the tax relief package that was part of the recent Omnibus legislation is a testament to the lobbying efforts of CCA and Rangeland Trustin both chambers of Congress. The tax relief package included multiple provisions that benefit ranchers, including the conservation tax incentive and permanently extending Section 179 deductions. Section 179 allows farmers and ranchers to take a full deduction on certain equipment and property purchases in a given year without depreciating the equipment or property over a long period of time.”
If you believe that a conservation easement may be a good fiscal management tool for your ranch, contact the California Rangeland Trust (CRT). CRT works with ranchers, their tax advisors, and legal counsel to place conservation easements on their ranches, helpingranchers keep their land.
First published in the February 2016 issue of California Cattlemen’s Magazine