easements the IRS and tax court | LinkedIn: easements the IRS and tax court
Published on January 4, 2019
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Lance Wallach
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As I have been warning the IRS will audit and you need help.
Gregory Rhodes Tucker Thoni 2. The Proceeds Clause If a condemnation, casualty or other extinguishing event occurs with respect to easement property, the land trust — donee — must be entitled to a portion of any proceeds attributable to the extinguishment or sale of the property at least equal to the land trust’s proportionate value in the property at the time of the easement donation.[1] This “proceeds requirement” is meant to ensure that the donation is perpetual even in the event the easement is extinguished. Below are the three most common proceedsclause-based arguments the IRS is making to disallow conservation easement deductions: Proceeds Allocation Formula The IRS argues that any extinguishment clause that does not precisely track the Treasury regulation’s proceeds allocation formula fails to protect conservation purposes in perpetuity. For example, in Carroll v. Commissioner of
Conservation Easement Cases And The IRS
ReplyDeleteConservation easement cases have become a primary focus of the IRS. IRS Commissioner Koskinen's letter to the Senate Finance Committee confirmed that the IRS believes that most syndicated easement donation transactions are patently abusive
The cases can result in enormous tax assessments, interest and draconian penalties imposed. In some cases, there can be criminal exposure. Likewise, the attorneys or others who were marketing and setting up these transactions may be targeted by the IRS for severe penalties and other actions.
In Notice 2017-10, the IRS has put taxpayers and practitioners on notice that it considers certain syndicated conservation easement transactions to be tax avoidance transaction, identifying the transactions as "listed transactions," meaning they could be considered abusive.
Section 170(e)(1) of the Tax Code allows a deduction for a qualified conservation contribution, which is a contribution of a qualified real property interest to a qualified organization exclusively for conservation purposes. The contribution should include a restriction, granted in perpetuity on the use that can be made of the real property.
The IRS asserts that some promoters are syndicating conservation easement transactions that purport to give investors the opportunity to obtain charitable contribution deductions in amounts that significantly exceed the amount invested. In those transactions, a promoter offers prospective investors in a partnership or another pass-through entity the possibility of a charitable contribution deduction for donation of a conservation easement.
The IRS will challenge the purported tax benefits from such transactions based on the overvaluation of the conservation easement. The IRS has indicated that it may also challenge the purported tax benefits from the transaction based on the partnership anti-abuse rule, economic substance, or other rules or doctrines.
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The IRS will be litigating a large number of conservation cases over the next several years. For a detailed analysis of your conservation easement case, or of a malpractice or negligence case that involves conservation easements, contac
conservation easements and IRS audits
ReplyDeletePublished on January 4, 2019
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Lance Wallach
Abusive tax shelters, 419, section 79, 412i micro captive insurance, VEBA, expert witn... See more
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Conservation Easement Cases And The IRS
Conservation easement cases have become a primary focus of the IRS. IRS Commissioner Koskinen's letter to the Senate Finance Committee confirmed that the IRS believes that most syndicated easement donation transactions are patently abusive
The cases can result in enormous tax assessments, interest and draconian penalties imposed. In some cases, there can be criminal exposure. Likewise, the attorneys or others who were marketing and setting up these transactions may be targeted by the IRS for severe penalties and other actions.
In Notice 2017-10, the IRS has put taxpayers and practitioners on notice that it considers certain syndicated conservation easement transactions to be tax avoidance transaction, identifying the transactions as "listed transactions," meaning they could be considered abusive.
Section 170(e)(1) of the Tax Code allows a deduction for a qualified conservation contribution, which is a contribution of a qualified real property interest to a qualified organization exclusively for conservation purposes. The contribution should include a restriction, granted in perpetuity on the use that can be made of the real property.
The IRS asserts that some promoters are syndicating conservation easement transactions that purport to give investors the opportunity to obtain charitable contribution deductions in amounts that significantly exceed the amount invested. In those transactions, a promoter offers prospective investors in a partnership or another pass-through entity the possibility of a charitable contribution deduction for donation of a conservation easement.
The IRS will challenge the purported tax benefits from such transactions based on the overvaluation of the conservation easement. The IRS has indicated that it may also challenge the purported tax benefits from the transaction based on the partnership anti-abuse rule, economic substance, or other rules or doctrines