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Did the IRS Penalize You for a Syndicated Conservation Easement?

Aug 24, 2021 Articles

Kurta Law securities lawyers are interested in speaking with investors who lost money due to a syndicated conservation easement. Starting around 2010, these types of private placements became popular with high-net-worth individuals looking for a way to reduce their income tax burden. “Conservation” refers to the conservation of land by restricting commercial and industrial development. When an investor buys a conservation easement, they limit how much developers can access that land. Investors purchase easements in exchange for a federal income tax deduction.

According to The Wall Street Journal, promoters describe syndicated conservation easements “as an efficient way to conserve land and shift tax benefits from landowners who don’t have the income to take deductions to people who do.” But certain partnerships created syndicated conservation easements that the IRS labeled abusive tax shelters. In 2021, the IRS had syndicated conservation easements on its “Dirty Dozen” list of the worst tax scams.

How Do You Calculate a Conservation Easement?

To calculate the deduction amount, appraisers value the easement by comparing the fair market value of the property before and after the easement. For instance, if Property A was worth $1,000,000 to developers before the easement and $500,000 after, the investor could take a deduction of $500,000. While $500,000 is a significant deduction, it does not result in a net profit for the investor.

Syndicated conservation easements offer a return on the initial purchase that is worth 2.5 to 3 times the initial purchase. How? Promoters find appraisers willing to over-inflate the value of the land purchased for the easement. They might over-value Property A at $3 million before the easement, allowing the investor to take a $2.5 million deduction, which is 2.5 the amount of the original purchase.

According to IRS conservation easement rules, could have to pay penalties as high as 40% -- the IRS penalty for a “gross valuation misstatement.”

Conservation Easements in the News

From 2010 to 2017, the IRS estimates that conservation-easement transactions lowered the total Federal income tax by $10.6 billion.

In 2016, the IRS issued Notice 2017.10, which declared syndicated conservation easements “listed investments.” This means that investors must flag these easements on their tax returns so the IRS can identify them more easily.

In 2020, the bipartisan Finance Committee Report encouraged the IRS to crack down even more on syndicated conservation easements.

What Should Investors Do Next?

Did your broker recommend a conservation easement that turned out to be an abusive tax shelter? You may be able to recover your losses through FINRA arbitration. If a FINRA arbitration panel finds that your broker did not perform their due diligence when they recommended a syndicated conservation easement, you may be owed damages. Contact Kurta Law for a free case evaluation with an experienced securities lawyer.

Examples of Conservation Easements

Kurta Law is interested in speaking with investors who worked with any of the following syndicated conservation easements. Call 877-600-0098 or email info@kurtalawfirm.com.

  1. 15th Street Partners
  2. 191 Partners LP
  3. 830 Oconee
  4. Adam Smith Ventures
  5. Albero Investors
  6. Aldgate Real Estate Partners
  7. Anderson Pointe Investments
  8. Aquatic Creek Group
  9. Arcadian Quay Holdings
  10. Ardan Investors
  11. Ash Resources Group
  12. Avalon Resources Group
  13. Azalea Bay Resort Holdings
  14. Bama Soil Partners
  15. Barn Creek Partners
  16. Basin Mountain LLC
  17. Basin Timber Holdings
  18. Bates Investments
  19. Battelle Investment Group
  20. Bayou Sand Investors
  21. Bear Creek Investors
  22. Bear Creek Timberland Investments
  23. Beaverdam Creek Investors
  24. Beech Springs Resort Holdings
  25. Bellavista Grove Holdings
  26. Belle Harbour Resort Holdings
  27. Belvoir Investors
  28. Benton INV
  29. Berkley Road Investors
  30. Bickford Farm Investments
  31. Bienville 75 Acquisitions
  32. Big Anvil Partners LLC
  33. Big Hill Partners
  34. Blue Ridge Valley Investments
  35. Blue Springs Investors
  36. Bonlee Investment Properties
  37. Bradford Investors
  38. Brand Rock Investments
  39. Brentwood Real Estate Partners
  40. Briar Patch Investments
  41. Broadmoor Quarry Investors
  42. Broad River Investors
  43. Browndale Plantation Reserve Investments
  44. Brush Creek Holdings
  45. Brushy Hollow Investments
  46. Camellia Station Holdings
  47. Canary Creek Partners
  48. Cape Fear Pointe Holdings
  49. Carey Station Investors
  50. Carl Parker 52 Investors
  51. Carter Investors
  52. Cason Investments
  53. Cayo Marsopa Holdings
  54. Centerland Group
  55. CGP Net Lease Mezz Equity I
  56. Cherokee 389 Investments
  57. Cherry Rock Group
  58. Chimney Rock Group
  59. Clinton Investments
  60. Coastavista Palms Holdings
  61. College Creek Investors
  62. Cox Point Plantation Investors
  63. Crestlawn Investors
  64. Crimson S&G Group
  65. Cristobal Key Holdings
  66. Crockett Investors
  67. Cub Creek Reserve Investments
  68. CXI Properties
  69. Cypress Cove Marina Holdings
  70. Cypress Creek Rock
  71. Cypress Rock Group
  72. Daniel Creek Investments
  73. Deep Green Investments
  74. Deer Valley Group
  75. Delta Sand Investors
  76. Derrydown Investors
  77. Desoto Investors
  78. Dev X Investment 2015
  79. Diamond Grande Resort Holdings
  80. Dixie Lake Investments
  81. Dome Mantle Partners
  82. Dover Cliff Partners
  83. Dry Creek Partners
  84. Dry Mill Creek Investments
  85. Duck River Investments
  86. Dynamite Creek Partners
  87. Echelon Waters Group
  88. EcoVest Capital Inc. 
  89. Edge Rock Partners
  90. Elbow Creek Group
  91. Emerald Acquisitions 2014
  92. Emerald Acquisitions 2015
  93. Emerald Acquisitions 2016
  94. Emerald Acquisitions 2017
  95. Emerald Property Investors
  96. Falling Rock Group
  97. Fantail Holdings Partners
  98. Farm River Partners
  99. FCT Investments
  100. FG River Partners
  101. Field View Group
  102. Flint River Rock & Timber Investments
  103. Forestar Investors, LLC
  104. Fork
  105. Fork Creek Partners
  106. Galley Resources Partners LLC
  107. Georgetown Riverfront Partners
  108. Giant Aggregates Partners LLC
  109. Ginn Creek Investments
  110. Glady Fork Partners
  111. Gray Mountain Investors
  112. Green Cove Group
  113. Green Valley Investors
  114. Greenview Group
  115. Gretsch Investments
  116. Gulf Land Group
  117. Gulf Land Investment Partners
  118. GWM Capital Real Estate
  119. Halyard Holdings Group
  120. Hard Rock Partners
  121. Harmon INV
  122. Harmon North Investments
  123. Harmon South Investors
  124. Harmony Road Investors
  125. Harris Top Investors
  126. Harrow Aggregates Partners LLC
  127. Hazel Hollow Investments
  128. Hillside View Partners
  129. Hornet’s Nest
  130. Horseshoe Bend Investors
  131. Huston Minerals Partners
  132. Igneous Rock Group
  133. Imperial Aggregates Group
  134. Inshore Group
  135. Iris Partners
  136. Ivery Branch Investors
  137. Jackson North Investments
  138. Jackson River Partners
  139. Jackson South Investments
  140. JC Aggregates Partners
  141. Jet Rock Partners
  142. Jones County Quarry Investors
  143. Jubilee Investment Holdings
  144. KC Aggregates Group
  145. Kinchafoonee Properties
  146. KR Stone Group
  147. Lakeshore Resort Holdings
  148. Lamstall Investors
  149. Laurel Creek Investors
  150. Lavis Properties Investors
  151. Leach Road East
  152. Lexington Property Investors
  153. Lion’s Gate Investments
  154. Little Cedar Stands Investments
  155. Little Horse Creek
  156. Little Pumpkin Creek Investors
  157. Little Pumpkin Creek North Investments
  158. Little River Partners
  159. Little Satilla Investors
  160. LM Bass Partners
  161. LMS Grande Pointe
  162. Locust Creek Investors
  163. Longwood Preserve Investors
  164. Low Angle Group
  165. Lowland Creek Partners
  166. Magnolia Bay Resort Holdings
  167. Magnolia River Group
  168. Manatee Minerals Group
  169. Marchette Investments
  170. Matterhorn Property Investors
  171. Mattock Holdings Group
  172. McGill Investors
  173. Mill Creek Investors
  174. Monterry Cove Holdings
  175. Myrtle West Resort Holdings
  176. Nassau River Partners
  177. NATRSC Investments
  178. Norma Dean I Investors
  179. North Bay Cove Holdings
  180. North by Northwest II
  181. North Donald LA Investors
  182. Northshore Property Investments
  183. North Unity Henry 92 Investors
  184. Northwest VII Investments
  185. Nottely River Partners
  186. Oak Bayou Group
  187. Ocean Grove Resort Holdings
  188. Oconee Landing Investors
  189. Oconee Quarry Investors
  190. Old Durrand Investments
  191. Orange Stone Group
  192. Orange Woods Partners
  193. Otemanu Village Sand Investors LLC
  194. Otter Rock Investments
  195. Pallur Investors
  196. Palmetto Minerals Investors
  197. Palmetto Waters Group
  198. Paoli Investors
  199. Parkerson Church Reserve Investments
  200. Parkerson Sands Investments
  201. Park Lake III
  202. Payne Creek Investors
  203. Peeksville Investments
  204. Picayune Pearl Aggregates Investors
  205. Piney Island Investors
  206. Pleasant Ridge Investors
  207. Preservation Group
  208. QM 40
  209. Quail Rock Group
  210. Quality Minerals Partners
  211. Quality Stones Group
  212. Queen’s Cove Holdings
  213. Quorum Holdings Partners
  214. Rabbit Bar Point Investments
  215. Rabun Gap Partners
  216. Raisal Holdings
  217. Ranch Springs Investors
  218. RD Heritage Group
  219. RDM Land Holdings
  220. Regional Minerals Partners
  221. Reliable S&G Group
  222. Richland Creek Investors
  223. Riddle Aggregates Group
  224. Rising Rock Partners Investments
  225. River Ridge Retreat Investments
  226. Rivershore Sand Investors
  227. Riverside Preserve Holdings
  228. River Trace Resort Holdings
  229. River West SC
  230. Roan Creek Investments
  231. Roaring Florida Acquisitions
  232. Rock Spring Investors
  233. Rocky Branch Investments
  234. Rocky Comfort Creek Investors
  235. Roscoe Road Investors
  236. Sailfish Cove Group
  237. Salt Marsh Holdings
  238. Sand Valley Investors
  239. Sanibel Resort Holdings
  240. Seavista Resort Holdings
  241. Seven Hawks Investments
  242. Shurling Investments
  243. South Bay Cove Holdings
  244. Southeastern Argive Investments
  245. South Quail Woods Investors
  246. Spade Rock Partners
  247. Spring Creek 1600 Acquisitions
  248. Spring Hill Partners
  249. Sterling Land Partners
  250. Storey Hollow Investments
  251. Strategic Real Estate Opportunity Fund III
  252. Sunfish Cove Group
  253. Sycamore Fork Investments
  254. Tanyard Investors
  255. Tarpon Creek Investments
  256. Tater Creek Investments
  257. Tennessee Branch Partners
  258. Tennessee Ranch Estates Investors
  259. TH 28 Partners
  260. Tick Creek Holdings
  261. Timothy Investors
  262. Tom’s Mountain Creek Investments
  263. Toscano Investments
  264. Two Chip Investors
  265. Union Creek Investments
  266. Upland Creek Partners
  267. Vibrant Minerals Investments
  268. Vineyard Ridge Investors
  269. Vista Hill Investments
  270. Wahoo River Investments
  271. Waterway Grove Holdings
  272. West Lake Investments
  273. White Oak Investments
  274. White Path Investors
  275. White Sands Village Holdings
  276. Yacht Creek Investments
  277. Yankee Landing Holdings
  278. Yellowhammer S&G Group
  279. Yellow River Investors
  280. Yield Rock Group
  281. Zebra Creek Rock LLC
  282. Zenith Aggregates Partners
  283. Zorn Island Investments