Tax-advantaged land deals known as syndicated conservation easements are under increasingly heavy scrutiny from the IRS and Congress.
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The transactions involve a tax break under tax code Section 170(h) that is designed to encourage property owners to give away the development rights for land or buildings for conservation purposes. Syndicated deals—which involve multiple parties who buy into a property, often based on promises of super-sized deductions worth several times more than their investment—are designated as tax schemes on the IRS’s infamous Dirty Dozen list.
The IRS has been fighting some of these deals in court, while legislation targeting the practice has progressed on Capitol Hill, albeit slowly.
On the latest episode of Talking Tax, Tabetha Peavey, an attorney adviser for the Tax Law Center at New York University Law, and Rep. Mike Thompson (D-Calif.), who has introduced legislation targeting the deals, discuss syndicated easements. Peavey explains how the transactions work and what the IRS has done to stop what it considers to be abusive behavior. Then Thompson offers his thoughts on whether this is the year that a long-simmering proposal to restrict the deals makes it through Congress.
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TL;DR
Syndicated conservation easements, which provide tax breaks for property owners donating development rights, are facing increased scrutiny from the IRS and Congress. The IRS has labeled these deals as tax schemes and is actively pursuing legal action against them.
- Syndicated conservation easements are designed to encourage land donations for conservation but often involve exaggerated tax deductions. The IRS has placed these deals on its Dirty Dozen list due to concerns over abuse. Legislation aimed at restricting these practices is slowly advancing in Congress, with discussions ongoing about potential reforms.
- Tax-advantaged land deals known as syndicated conservation easements are under increasingly heavy scrutiny from the IRS and Congress.
- Listen here and subscribe to Talking Tax on Apple Podcasts, Spotify, Google Podcasts, Stitcher, Megaphone, or Audible.
Syndicated conservation easements are tax-advantaged land deals where multiple parties invest in a property to obtain significant tax deductions by donating development rights for conservation purposes.
These deals are under scrutiny because they often promise tax deductions that far exceed the actual investment, leading the IRS to classify them as potential tax schemes on its Dirty Dozen list.
The IRS has been actively challenging these deals in court, viewing them as abusive tax practices, and is working to enforce regulations against them.
Legislation aimed at restricting syndicated conservation easements has been introduced, but progress has been slow, with ongoing discussions among lawmakers about potential reforms.
You can listen to the podcast 'Talking Tax' on platforms like Apple Podcasts, Spotify, Google Podcasts, Stitcher, Megaphone, or Audible to hear more about syndicated conservation easements and related topics.