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Why Sometimes It's Good To Be a Winegrower

How does this sound to you? If you're a winegrower anywhere in the United States you can donate your vineyards to a local land trust (a non-profit organization dedicated to keeping land free from commercial development) before January 1, 2007, continue to work the land for as long as you and your heirs want to, all the while deducting potentially up to 100% of your Adjustable Gross Income from your taxes for the next fifteen years.

Yes, that's right. Make a commitment that your vineyard will never be turned into condos or a luxury resort and potentially you can pay no taxes for fifteen years.

Sometimes, it's a pretty darn good deal to be a winegrower. (Actually, this bill, HR4 that was recently signed into law as a rider on recent pension legislation , applies to all agricultural and livestock farmers). vineyard_prot.jpg

Without getting into the pros and cons of such tax breaks for farmers and ranchers (am I jealous? Hell yeah) this certainly seems like a golden opportunity to keep some of America's wine country protected from commercial development.

Andy Beckstoffer is perhaps the first person, and certainly the first winegrower, to take advantage of this legislation. He has donated his famous To Kalon vineyard to the Land Trust of Napa County. To Kalon is one of California's most famous single vineyards, and by creating what is known as a Conservation Easement of the property, Beckstoffer is ensuring that it never becomes a parking lot.

Which is a pretty awesome thing, and which I'm sure some Bordeaux winegrowers wish they had at their disposal given the recent uproar at the plans to tear up some Margaux vineyards to make room for a trans-European highway

So how does this work, exactly? It's really quite simple. If you are an individual farmer (not a corporation) who makes more than 50% of your living from agriculture, you can donate an unlimited amount of your agricultural land (and/or historic buildings) to a conservation group (usually a land trust) and then you get to deduct the "fair market value" of that land for fifteen years, up to 100% of your adjusted gross income. And if you're a winegrower in Napa or Sonoma county, that "fair market value" is likely to be quite a tidy sum.

Unless extended by congress, the window of opportunity to make such donations is only until the end of the year. Here are some of the vineyards Iwould like to see preserved forever off the top of my head:

All of Spring Mountain
Hirsch Vineyard, Mendocino
Sangiacomo Vineyard, Carneros
Sangiacomo Vineyard, Sonoma Coast
Ritchie Vineyard, Sonoma
Three Palms Vineyard, Napa
Chabot Vineyard, Napa
Martha's Vineyard, Napa
The Original Grandpere Vineyard, Amador
Bucklin Old Hill Ranch, Sonoma

Got any to add? Call your favorite winegrower.

Comments (5)

Jared S. wrote:
08.27.06 at 2:04 PM

While you are correct that this is a Golden Opportunity, this has been going on in various locales for years. In Long Island (NY) for example, the Peconic Land Trust or even the local towns (Southold being the most liberal) will by the development right to any agricultural properties. Several of the Long Island vineyards have already taken advantage of this.

http://www.peconiclandtrust.org/ (grossly outdated)

Alder wrote:
08.27.06 at 7:02 PM


Yes, donating property to land trusts is nothing new at all. They've been around for a long time. The HUGE tax break that just went into effect, though, is very new and very large.

Bob wrote:
08.28.06 at 8:06 PM

Another fine old vineyard worthy of preserving is that of Stan and Gertie Planchon in Oakley. Stan is 80+. Many of the vines were planted by his father many years ago.

Whit Stevens wrote:
08.29.06 at 1:39 PM

Sounds similar to the tax breaks available for restrictive covenants that preserve historic buildings. Those have come under heavy scrutiny lately, as value lost due to such covenants often appear grossly exaggerated.

This type of arrangement seems great for large vineyard holders and big housing developers, bad for tax-payers and people who want to buy houses in rural areas.

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