Overview
On August 25, Senate Finance Committee Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) released a report on their investigation into syndicated conservation easement transactions that was launched in March 2019.
The report focuses on transactions where taxpayers receive more than $4 worth of charitable contribution tax deductions for every dollar that is invested into a partnership entity that, according to the report, appears to serve no business purpose other than the provision of tax deductions through the seemingly inflated appraisals of conservation easements on undeveloped land. The IRS designated this type of transaction, with a deduction of more than two and a half times the invested amount, as a "listed transaction" tax shelter since the end of 2016. According to the report, the IRS has identified 662 syndicated conservation easement transactions entered into from 2015 through 2017. In addition, as of February 2020, the IRS is either auditing or planning to audit 84% of these partnerships. The report includes detailed factual descriptions of particular transactions that the Committee believes to be abusive, including lightly redacted emails between individual transaction promoters and high-income investors.
Based on the information gathered in the investigation, the Senate Finance Committee Chairman and Ranking Member support the reasons behind the IRS's enforcement action against syndicated conservation easement transactions. The report also provides that the Chairman and Ranking Member believe that because the transactions have continued despite their designation as listed transactions, Congress, the IRS, and Department of the Treasury should take further action to preserve the integrity of the conservation easement tax deduction.
