Syndicated Conservation Easements — Nationwide Information Protection And IRS Scrutiny Continues – Tax Authorities

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On May 2, 2022, the Wall Street Journal published two detailed
articles authored by Richard Rubin on the subject of syndicated
conservation easements: Conservation Tax-Break Deals Keep
Flowing Despite IRS Crackdown (WSJ 2022.05.02)
and How a Georgia Pine Farm Became a Significant Tax
Deduction (WJS 2022.05.02). In the first article, the
author notes that IRS data released in 2020 showed syndicated
easement deductions climbing from $6 billion in 2016 to $9.2
billion in 2018. And, the author quotes the head of the IRS’s
business and international division as stating, “We don’t
feel like we’ve seen the full impact of our (the IRS’s)
efforts just yet. . . . We view it as abusive and problematic, and
we will continue to throw significant enforcement tools” at
abusive syndicated conservation easement tax shelters.

In the second article, the author focuses on a specific 434-acre
pine-tree farm in Georgia and its dedication for conservation
purposes pursuant to a syndicated easement arrangement. The author
writes, “In 2020, some McGinnis family members sold off
three-fifths of the property for $310,000. By the end of 2021, the
. . . land had been sold again, this time to a business that raised
$10.7 million from investors in a land-conservation deal. That
transaction could yield its investors millions of dollars more in
tax deductions—as well as scrutiny from the Internal Revenue
Service.” Rubin writes that billions of dollars of tax revenue
are at stake in abusive syndicated conservation easement tax

As Freeman Law has reported, syndicated conservation easements
are #1 on the IRS’s Dirty Dozen list for 2021, which
notes: “In syndicated conservation easements promoters take a
provision of tax law for conservation easements and twist it
through using inflated appraisals of undeveloped land and
partnerships. These abusive arrangements are designed to game the
system and generate inflated and unwarranted tax deductions, often
by using inflated appraisals of undeveloped land and partnerships
devoid of a legitimate business purpose.”

Freeman Law has written extensively on the challenges of and
scrutiny received by conservation easements—syndicated and
otherwise. See, for example:

Freeman Law’s Tax Court in Brief: Oxbow Bend, LLC v. Commissioner, T.C. Memo 2022-23
(March 21, 2022); Pickens Decorative Stone, LLC v. Commissioner,
T.C. Memo. 2022-22 (March 17, 2022)

Freeman Law Senate Releases Report on Syndicated Conservation

Freeman Law Syndicated Conservation Easements (and Other Tax
Schemes) Beware

Freeman Law The Art of an IRS APA Defense: Conservation
Easements and Hewitt

Freeman Law Conservation Easement Deductions: A Primer on Key

Freeman Law Recent Tax Court Conservation Easement Decision
Demonstrates Continued IRS Enforcement Efforts and Penalty

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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