Investments in controversial land-donation deals have continued increasing despite rising pressure against them by federal officials, as have the value of the tax deductions claimed, new IRS data show.
The agency has spotlighted such deals, called syndicated conservation easements, as ripe for tax abuse.
But the number of deals, investors and their rates of return have expanded alongside increased scrutiny, which has come from the Justice Department, Congress, and years of notice by the IRS that syndicated conservation easements are likely to get audited. The IRS has required them to file extra disclosure paperwork as a result of a regulation dating to late 2016.
New Numbers: The latest increases mostly come from 2018, which were reported in 2019. They include a jump in deductions for syndicated conservation easements to $9.2 billion in 2018 from $6.8 billion in 2017.
The volume of investors surged to 32,465 from 21,000, though some are involved in multiple deals, so they may be counted more than once as a result. Accounting for that, additional IRS data on unique investors still showed a year-over-year increase to 16,900 in 2018 from 14,000 in 2017.
Investors in the top-performing deals received a return-to-investment ratio of nearly 12 times their investment, according to disclosures they filed to the IRS in 2019, up from nearly 9.5 percent from the same grouping for disclosures filed in 2018.
The number of deals rose to 17,182 in 2019 from 15,499 in 2018. In addition, the number of material advisers to the deals and their appraisers also increased.
Pushback: Supporters of the easements say critics are unfairly targeting them.
“Critical market-based conservation incentives are rightly a popular tool for Americans to save critical habitats and lands in the path of development," Robert Ramsay, president of the Partnership for Conservation, said in a statement responding to the IRS report.
"Rather than vilify all partnerships of unrelated individuals who donate conservation easements and participate in this important conservation solution, policymakers and stakeholders must advance common sense solutions to enhance the integrity of all conservation easements."
What’s Next: IRS Commissioner Chuck Rettig has asked lawmakers to pass legislation to limit syndicated conservation easements, and Senate Finance Chair Chuck Grassley (R-Iowa) and ranking member Ron Wyden (D-Ore.) called for more regulation and oversight following a lengthy investigation into the deals. They’ve all said abusive deductions hurt traditional conservation easements.
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September 23, 2020 at 09:44PM
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Land donation tax deduction deals increasing despite continued scrutiny - Politico
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