Conservation Easement Exchanged for Mitigation Credits is a Sale or Exchange

The IRS has issued a private letter ruling holding that the conveyance of a perpetual conservation easement in exchange for mitigation credits is a sale or exchange of property under Code Section 1001 for federal income tax purposes.  This is one of only two letter rulings ever issued by the IRS addressing the taxability of mitigation credits, and it supports the previous analysis we made on the tax consequences of mitigation credits.  For more analysis, see the article previously published by Charles Egerton and Christine Weingart.