Conservation Easement Investments: There may be a Tax Audit in your Future.
Syndicated conservation easements are investments that promise huge tax deductions worth four to four-and-a-half times a person’s investment. The IRS has been investigating these transactions over the past four years with questions about the accurate appraisals and valuations of properties.
On March 27th, 2019 we reported that the Senate Finance Committee launched an investigation into conservation easements after the Brookings Institution reportedly found that conservation easements cost the federal government more than $3 billion dollars in 2014 alone with that amount expected to increase each subsequent year.
Apparently the Senate Finance Committee believed that groups of taxpayers were using syndicated conservation easements to reap tax benefits greater than their initial investments, according to a press announcement.
While there are very legitimate purposes for the conservation easement provisions of the tax code, the committee reportedly believes that “these tax provisions are being abused, and it will inform what else ought to be done to fix the problem.”
Senate Finance Committee Report, August 25, 2020
According to Senate Finance Committee Report released on August 25, based on the information gathered in this investigation, Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and Ranking Member Ron Wyden (D-Ore.) conclude “the IRS has strong reason for taking enforcement action against syndicated conservation-easement transactions,” as it has to date. Furthermore, in light of the continued use of these abusive transactions despite the issuance of IRS Notice 2017-10, Grassley and Wyden believe Congress, the IRS and the Treasury Department should “take further action to preserve the integrity of the conservation-easement tax deduction.”
The Senate Finance Committee’s full report can be found here.
Filing a Complaint against your Brokerage Firm
The White Law Group continues to investigate g potential securities fraud claims involving the liability that sale agents and broker-dealers may have for improperly recommending conservation easements (tax shelter land deals) to unsuspecting investors.
Investors who received charitable contribution deductions of more than 2.5 times their investment could possibly be audited, and potentially even hit with a revised tax bill.
These syndicated conservation easements may be sold through both independent broker-dealers and directly by attorneys and CPAs who create the syndications and tend to have high commissions and fees.
Prior to making recommendations to an individual investor, brokerage firms are required by the Financial Industry Regulatory Authority (FINRA) to disclose all the risks of an investment. Recommendations should only be made if the investment is suitable for an individual investor given their age, investment objections, investment experience and risk tolerance.
Brokerage firms that do not perform adequate due diligence on an investment and/or make unsuitable recommendations can be held accountable for investment losses through FINRA arbitration.
Free Consultation with a Securities Attorney
If you have invested in a conservation easement (tax shelter land deal), please call The White Law Group at 1-888-637-5510 for a free consultation.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee. To learn more about The White Law Group visit www.whitesecuritieslaw.com.