On December 29, 2021, in Hewitt v. Commissioner, the Court of Appeals for the 11th Circuit reversed the U.S. Tax Court’s decision regarding the proceeds clause set forth in Treas. Reg. Sec. 1.170A-14(g)(6)(ii). Numerous cases decided by the Tax Court have determined that the proceeds clause in a conservation easement may not allow the
Chief Counsel Advice on Pre-Existing Uses in a Conservation Easement
On October 15, 2021, the Office of Chief Counsel of the Internal Revenue Service (IRS) disclosed a copy of a communication in 202141022 suggesting that notification of the exercise or continuance of a use of land that pre-exists the donation of a conservation easement is required in order for the conservation easement to meet the
IRS Chief Counsel Advice Memorandum on Extinguishment Proceeds Clauses
On July 30, 2021, the Office of Chief Counsel of the Internal Revenue Service (IRS) released a Chief Counsel Advice Memorandum 202130014 on the requirements of I.R.C. Section 170(h) and Treas. Reg. Section 1.170A014(g)(6)(ii) for an extinguishment proceeds clause in a conservation easement. Citing PBBM-Rose Hill, Ltd. v. Commissioner and Coal Property Holdings, LLC v.
11th Circuit Court Denies Conservation Easement Deduction in TOT Property Holdings Case
On June 23, 2021, the U.S. Court of Appeals for the 11th Circuit in TOT Property Holdings upheld the denial of a charitable deduction for a conservation easement on the grounds that the donated conservation easement was not protected in perpetuity under I.R.C. § 170(h)(5)(A). The denial was based once again on an improper proceeds
IRS Creates Office of Promoter Investigations
On April 19, 2021, the Internal Revenue Service (IRS) announced the formation of the Office of Promoter Investigations (OPI) (IR-2021-88) to increase the focus of the IRS on the promoters of abusive tax avoidance transactions, including abusive syndicated conservation easements. The new OPI will coordinate the efforts of various business divisions, including Large
IRS Updates Conservation Easement Audit Technique Guide
On November 25, 2020, the Internal Revenue Service (IRS) updated its Conservation Easement Audit Technique Guide with a revision date of November 9, 2020. The Guide is a reference document for IRS staff for the examination of charitable contributions of conservation easements. Although the IRS is quick to point out that the Guide is not
IRS Finalizes Settlement of Syndicated Conservation Easement Transactions Under Initiative to Resolve Pending Cases
The Internal Revenue Service (IRS) announced on August 31, 2020 that Coal Property Holdings, LLC and its partners agreed to a disallowance of their $155 million charitable deduction claimed for a conservation easement donation on 3,700 acres in Tennessee (IR-2020-196).
Continue Reading IRS Finalizes Settlement of Syndicated Conservation Easement Transactions Under Initiative to Resolve Pending Cases
Senate Report on Syndicated Conservation Easement Transactions
Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and Ranking Member Ron Wyden (D-Ore.) released a report on their bipartisan investigation into syndicated conservation easement transactions (report summarized here). These abusive transactions are created by promoters who sell interests in land to taxpayers seeking large tax deductions. Upon investing in these schemes, the taxpayers grant conservation easements using inflated appraisals and then share the inflated tax deductions among the investors. The abusive nature of these transactions stems from the inflated appraised values of the conservation easements and the effective purchase by investors of tax deductions, both concepts negating any charitable intent by the donors of the conservation easements. The report states that the IRS estimates that between 2010 and 2017, syndicated conservation easement transactions have generated $26.8 billion in charitable contribution deductions for the investors.
Continue Reading Senate Report on Syndicated Conservation Easement Transactions
Great American Outdoors Act Permanently Funds LWCF
On August 4, 2020, the Great American Outdoors Act was signed into law, providing $900 million of full and dedicated funding of the Land and Water Conservation Fund (LWCF) for the protection of parks, wildlife refuges and recreation areas at the federal, state and local level. The LWCF was created by Congress in 1964 with