Major Crackdown On Conservation Easements Or IRS Bluff?
Conservation easement charitable deductions are a relatively benign tax expenditure. The idea is that somebody who owns property with a highest and best use different from its current use should be able to give up the right to develop in the interest of conservation and receive a charitable deduction (Note I am simplifying here).
When you give something to charity your deduction is generally the fair market value of what you gave. The best way to arrive at fair market value is through comparable sales. But people don’t buy and sell conservation easements very much, if at all.
So you value the easement by figuring out the value of the property without the easement and subtract the value of the property with the easement. It is the before value that is a problem, because we have to think about what you might do with the property.
Syndicated Conservation Easements – Mining Concepts For Tax Dollars
The recent Tax Court decision Coal Property Holdings is a good illustration of Reilly’s Fourth Law of Tax Planning – Execution isn’t everything but it’s a lot. This is a conservation easement syndication deal and the facts indicate that it is on the questionable side.
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Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.