What are the risks?

What are the risks in donating a CE?

The primary risk is that of an adverse IRS audit. There is no way to eliminate the possibility of an

audit; in fact, all actions should be undertaken with the assumption that there will be an audit.

That being said, conservation easements in general are not currently known to be "red flags"

and only a small percentage of them are pulled for an audit. For those conservation easements

that are audited, the IRS seems to focus on two primary issues: the validity of the appraised

deduction and the validity of the ecological or social "conservation purposes" represented by

the property. The ability of a conservation easement to withstand an economic valuation test is

almost entirely dependent on the strength of the appraisal. It is therefore very important that

the appraisal be prepared by a well-qualified appraiser who is experienced in the preparation of

conservation easement valuations.