Syndicated Conservation Easements Get Complicated

Designating conservation easements on property can be a great way to preserve land while gaining a valuable tax break. But the IRS is cracking down on abuses of this practice by partnerships and individuals who have invested in syndicated conservation easements. If you’re an investor who took tax deductions on donations of conservation easements through syndicated transactions, you may be receiving a time-sensitive ultimatum in the form of a settlement offer. Don’t miss it in the mail.
The offers come in the wake of the U.S. Tax Court striking down four abusive syndicated conservation easement transactions totaling nearly $21 million in July alone. These letters are being sent to certain taxpayers with pending docketed Tax Court cases to avoid court time. The settlement requires a concession of the income tax benefits claimed by the taxpayer and imposes penalties.
The IRS warns that some promoters of abusive transactions have downplayed the significance of the string of recent court decisions holding in the government’s favor, arguing that their cases are somehow different or that those decisions might be reversed on appeal.
“Taxpayers should ignore this nonsense, take an objective look at their cases, and cut their losses,” said IRS Chief Counsel Mike Desmond. “Abusive transactions, like settlement offers, do not get better with time, and this is a good opportunity to get out.”
Forbes contributor Peter J. Reilly dives deeper into these types of deals and how the IRS has come to its conclusion on them here. If you’ve received a settlement offer—or if you’re involved in a syndicated conservation easement deal and are worried about the tax implications—don’t delay when it comes to weighing your options. Feel free to contact us with questions.
Photo from 123rf.com