By Kenneth H. Bridges, CPA, PFS December 2020
As mentioned in some of my previous articles on the topic, Georgia is the epicenter of the syndicated conservation easements industry, which has been in the IRS’ crosshairs for quite some time. Accordingly, we continue to provide regular updates on the topic of conservation easements.
There have been too many court decisions issued to cover them in the limited space provided here, but the Tax Court has largely continued to rule in the IRS’ favor on technical foot faults and express skepticism over the values claimed. The Senate Finance Committee issued a fairly scathing report from its investigation; another class action lawsuit has been filed against promoters, appraisers, attorneys and accountants who were involved in easement transactions; the IRS issued a Chief Counsel Memorandum to its agents explaining how to apply the 75% civil fraud penalty to easement transactions; and the IRS has begun making settlement offers to those with cases docketed at the Tax Court.
The IRS settlement offers can vary, but, in general, for those who were not involved in promoting the investment, the offer is that you forego the deduction you took and instead take deduction for amount of the investment, compute the tax on the difference, and pay that plus accrued interest and a penalty of 10%. Those who were involved in promoting the transaction get no deduction and pay the tax, accrued interest, and a penalty of 40%.
Kenneth H. Bridges, CPA, PFS is a partner with Bridges & Dunn-Rankin, LLP, an Atlanta-based CPA firm.
This article is presented for educational and informational purposes only, and is not intended to constitute legal, tax or accounting advice. The article provides only a very general summary of complex rules. For advice on how these rules may apply to your specific situation, contact a professional tax advisor.