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Conservation Easements – Is This Winning?
Looking for lucrative deductions to reduce your taxable income? Many people are turning to Conservation Land Easements (CE), and the tax authorities are doing their best to deny these deductions. When a property meets the IRS criteria for a conservation easement, the owner may qualify to deduct thousands of dollars simply by acquiring the right kind of land an LLC holds. Often, these deductions are worth much more than the actual cost of getting the LLC interest. Sounds appealing doesn’t it? Under a conservation easement, a property’s owner gives up the right to make certain changes to that property to preserve it for future generations. Such an easement usually limits the usefulness of the property and lowers its value. But the tax deduction is not based just on the property’s reduction in value. The magnitude of the deduction comes into play when the deduction’s value is calculated by taking the difference between the appraised “highest and best use” of the property and its new reduced value. These best use appraisals often make assumptions about the property’s potential creating massive tax deductions, which, of course, leave taxpayers lining up to claim. But be careful! The IRS is cracking down on what it calls an “abusive tax deduction”; even going so far as to list the strategy on its Dirty Dozen list of tax scams. Yet even after spending billions of dollars, the service is not having much success. In fact, it’s losing key arguments on the strategy. Continue reading to learn how to participate safely.
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CURRENT EDITION
Leaving the United States, Part III: Dual Citizenship
In Part I of this three-part series, we discussed the implications and taxes for American expatriates. In Part II we turned our attention to renouncing citizenship. Here in Part III, we will consider the halfway point of dual citizenship. And as you would expect, taxes are a serious consideration.
Reflecting On Rothing
I have been dissatisfied with most of the articles that I have read about what I call Rothing, i.e. foregoing a deduction for retirement savings with the prospect of tax-free distributions in the future or taking the tax hit on a deferred account to convert it to a tax-free account. The articles generally have a pro-Roth bias. Suze Orman, for example, swears by Roths. They also tend to not have numbers in them. What I am going to do here is to reflect on the idea of Rothing and discuss what I see as some key numbers. I’m not going to dive deep into technical issues.
Considering a Historic Building for Your Business? These Tax Credits are Good News
Historic buildings make a beautiful location for doing business. Unfortunately, many of them may seem out of the price range of small business owners. But, that’s not necessarily the case. The state and federal governments have an interest in preserving these properties, and they are willing to give you tax credits for buying and restoring a historic building. The credits reimburse a large proportion of your restoration costs. This really is a great incentive to go for a building that will give your company a unique and professional feel.
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