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Land Conservation Easements: Tax Avoidance or Evasion?
Question: I was going to look into a conservation easement (CE) for a client and noticed the IRS has focused heavily on compliance efforts for abusive syndicated transactions. Are there any legitimate conservation easement transactions, or is it best to stay away from this strategy until things calm down? Answer: Sounds too good to be true, right? A $500,000 charitable tax deduction for a $100,000 land purchase in December. In your search for information, you may be scared off by the court cases and Department of Justice investigations of the promoters of syndication easements. Syndication deals are partnerships that own land ideal for conservation and allow groups of investors to pool their money in the business, which typically will also include other activities beyond just the land ownership. These deals have come under heavy scrutiny in the past few years as CEs became a listed transaction and more cases have wound their way through the court system. The IRS even announced a settlement program for syndicated conservation easements in mid-2020. Click here to read the full answer.
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CURRENT EDITION
Editor’s Pick: The Future of Digital Product Taxation—What Tax Professionals Need to Know
As states increasingly focus on taxing digital products, tax professionals need to be aware of how these changes will affect their clients and businesses. The Multistate Tax Commission (MTC) is at the forefront of efforts to create more uniform approaches to taxing digital goods, and their proposals could have far-reaching consequences for compliance, pricing strategies, and audit risks. Here’s a breakdown of the major proposals under consideration and how they will impact sellers of digital products—and the tax professionals advising them.
Striking a Balance: Pitching to the Umpires of Tax Law – Understanding US Tax Court Judges through the Art of Baseball Analogies
In this fascinatingly original article, we explore the striking parallels between America’s pastime and the high-stakes world of tax litigation. Prepare to be surprised as we reveal the hidden connections between the umpires of the diamond and the judges of the Tax Court. From the precise strike zones of regular judges to the veteran expertise of senior judges, and the specialized skills of special trial judges, you’ll gain a newfound appreciation for the officials who keep the game of tax law fair and balanced.
Dodging the IRS Penalty Flag: Avoiding the Accuracy-Related Penalty
A penalty specifically for taxpayers who have made a mistake on their return. That’s how I explain the accuracy related penalty to taxpayers. This penalty carries a punch as well, with 20% of the tax the IRS didn’t receive due to the taxpayer making a mistake. This seems harsh out of context. The reason for this harshness is because the IRS considers these “mistakes” to be intentional due to taxpayer negligence. This is one of the reasons at my firm that we encourage our clients to take their time when filling out the intake form and gathering their documents. Omitting an income document can be costly in the end to both you and your client. The IRS will hit your client with penalties that they could have avoided, and you may compromise the integrity of your firm.
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