Well Known Tax-Avoidance Technique Becomes a Listed Transaction by the IRS

As per usual, if it sounds too good to be true, it probably is!

The Department of the Treasury and the Internal Revenue Service are aware that some promoters are syndicating conservation easement transactions that falsely claim to give investors the opportunity to obtain charitable contribution deductions in amounts that significantly exceed the amount invested.

Those who have used or were planning to use pre-packaged conservation easements to lower their taxes got a bit of a surprise when the IRS made those deals a “listed transaction” in Notice 2017-10.

Conservation easements are one of those deductions that are meant to further the public good, by encouraging those with certain types of property to donate property rights to charitable organizations so that the property stays in its current form. Conservations easements have been used to preserve wetlands and forests for wildlife, as well as battlefields.

But, like anything that generates a deduction, conservation easements are often abused by tax shelter promoters and have become somewhat of a tax-avoidance technique.