Details of Public Law 117-328, section 605 , Consolidated Appropriations Act, 2023, Charitable Conservation Easements

This provision, which applies to pass-through entity contributions, disallows a qualified conservation contribution deduction if the amount of such contribution exceeds 2.5 times the sum of each partner’s relevant basis in such partnership unless the pass-through entity provides a statement on their return that they made the contribution and provides information as required by the Secretary. An exception is provided if after a 3-year holding period and if the contributing partnership’s interests are held by an individual and member of the family of such individual, or if the contributions are to preserve certified historic structures.

Additionally, the provision expands accuracy-related penalties to include underpayment from the disallowance of the deduction explained above, adds reporting requirements, and allows donors the opportunity to amend an easement deed per the published safe harbor deed language. The reasonable cause exception for underpayments will not apply if it is due to the disallowance of the deduction explained above.

Under the PITL, California generally conforms to the federal charitable contribution rules under IRC section 170 as of the specified date of 1/1/2015, and as a result, does not conform to the provisions related to the deduction limitation for qualified contribution made by a pass-through entity or the exception to the holding period.

Under the CTL, California does not conform to IRC section 170, but instead has standalone law that is generally similar to federal law allowing corporations a deduction for charitable contributions. There are no similar CA provisions that disallow contribution deductions that exceed partnership basis. Thus, California would not conform to these provisions under the CTL.

Under the Administration of Franchise and Income Tax Law, California has modified conformity to IRC 6662, as it existed as of the specified date of 1/1/2015. California does not conform to the changes related to the accuracy-related penalty.

23/24 24/25 25/26 26/27 27/28 $65,000,000 $46,000,000 $35,000,000 $25,000,000 $22,000,000