Did the IRS Penalize You for a Syndicated Conservation Easement?
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.
- 15th Street Partners
- 191 Partners LP
- 830 Oconee
- Adam Smith Ventures
- Albero Investors
- Aldgate Real Estate Partners
- Anderson Pointe Investments
- Aquatic Creek Group
- Arcadian Quay Holdings
- Ardan Investors
- Ash Resources Group
- Avalon Resources Group
- Azalea Bay Resort Holdings
- Bama Soil Partners
- Barn Creek Partners
- Basin Mountain LLC
- Basin Timber Holdings
- Bates Investments
- Battelle Investment Group
- Bayou Sand Investors
- Bear Creek Investors
- Bear Creek Timberland Investments
- Beaverdam Creek Investors
- Beech Springs Resort Holdings
- Bellavista Grove Holdings
- Belle Harbour Resort Holdings
- Belvoir Investors
- Benton INV
- Berkley Road Investors
- Bickford Farm Investments
- Bienville 75 Acquisitions
- Big Anvil Partners LLC
- Big Hill Partners
- Blue Ridge Valley Investments
- Blue Springs Investors
- Bonlee Investment Properties
- Bradford Investors
- Brand Rock Investments
- Brentwood Real Estate Partners
- Briar Patch Investments
- Broadmoor Quarry Investors
- Broad River Investors
- Browndale Plantation Reserve Investments
- Brush Creek Holdings
- Brushy Hollow Investments
- Camellia Station Holdings
- Canary Creek Partners
- Cape Fear Pointe Holdings
- Carey Station Investors
- Carl Parker 52 Investors
- Carter Investors
- Cason Investments
- Cayo Marsopa Holdings
- Centerland Group
- CGP Net Lease Mezz Equity I
- Cherokee 389 Investments
- Cherry Rock Group
- Chimney Rock Group
- Clinton Investments
- Coastavista Palms Holdings
- College Creek Investors
- Cox Point Plantation Investors
- Crestlawn Investors
- Crimson S&G Group
- Cristobal Key Holdings
- Crockett Investors
- Cub Creek Reserve Investments
- CXI Properties
- Cypress Cove Marina Holdings
- Cypress Creek Rock
- Cypress Rock Group
- Daniel Creek Investments
- Deep Green Investments
- Deer Valley Group
- Delta Sand Investors
- Derrydown Investors
- Desoto Investors
- Dev X Investment 2015
- Diamond Grande Resort Holdings
- Dixie Lake Investments
- Dome Mantle Partners
- Dover Cliff Partners
- Dry Creek Partners
- Dry Mill Creek Investments
- Duck River Investments
- Dynamite Creek Partners
- Echelon Waters Group
- EcoVest Capital Inc.
- Edge Rock Partners
- Elbow Creek Group
- Emerald Acquisitions 2014
- Emerald Acquisitions 2015
- Emerald Acquisitions 2016
- Emerald Acquisitions 2017
- Emerald Property Investors
- Falling Rock Group
- Fantail Holdings Partners
- Farm River Partners
- FCT Investments
- FG River Partners
- Field View Group
- Flint River Rock & Timber Investments
- Forestar Investors, LLC
- Fork
- Fork Creek Partners
- Galley Resources Partners LLC
- Georgetown Riverfront Partners
- Giant Aggregates Partners LLC
- Ginn Creek Investments
- Glady Fork Partners
- Gray Mountain Investors
- Green Cove Group
- Green Valley Investors
- Greenview Group
- Gretsch Investments
- Gulf Land Group
- Gulf Land Investment Partners
- GWM Capital Real Estate
- Halyard Holdings Group
- Hard Rock Partners
- Harmon INV
- Harmon North Investments
- Harmon South Investors
- Harmony Road Investors
- Harris Top Investors
- Harrow Aggregates Partners LLC
- Hazel Hollow Investments
- Hillside View Partners
- Hornet’s Nest
- Horseshoe Bend Investors
- Huston Minerals Partners
- Igneous Rock Group
- Imperial Aggregates Group
- Inshore Group
- Iris Partners
- Ivery Branch Investors
- Jackson North Investments
- Jackson River Partners
- Jackson South Investments
- JC Aggregates Partners
- Jet Rock Partners
- Jones County Quarry Investors
- Jubilee Investment Holdings
- KC Aggregates Group
- Kinchafoonee Properties
- KR Stone Group
- Lakeshore Resort Holdings
- Lamstall Investors
- Laurel Creek Investors
- Lavis Properties Investors
- Leach Road East
- Lexington Property Investors
- Lion’s Gate Investments
- Little Cedar Stands Investments
- Little Horse Creek
- Little Pumpkin Creek Investors
- Little Pumpkin Creek North Investments
- Little River Partners
- Little Satilla Investors
- LM Bass Partners
- LMS Grande Pointe
- Locust Creek Investors
- Longwood Preserve Investors
- Low Angle Group
- Lowland Creek Partners
- Magnolia Bay Resort Holdings
- Magnolia River Group
- Manatee Minerals Group
- Marchette Investments
- Matterhorn Property Investors
- Mattock Holdings Group
- McGill Investors
- Mill Creek Investors
- Monterry Cove Holdings
- Myrtle West Resort Holdings
- Nassau River Partners
- NATRSC Investments
- Norma Dean I Investors
- North Bay Cove Holdings
- North by Northwest II
- North Donald LA Investors
- Northshore Property Investments
- North Unity Henry 92 Investors
- Northwest VII Investments
- Nottely River Partners
- Oak Bayou Group
- Ocean Grove Resort Holdings
- Oconee Landing Investors
- Oconee Quarry Investors
- Old Durrand Investments
- Orange Stone Group
- Orange Woods Partners
- Otemanu Village Sand Investors LLC
- Otter Rock Investments
- Pallur Investors
- Palmetto Minerals Investors
- Palmetto Waters Group
- Paoli Investors
- Parkerson Church Reserve Investments
- Parkerson Sands Investments
- Park Lake III
- Payne Creek Investors
- Peeksville Investments
- Picayune Pearl Aggregates Investors
- Piney Island Investors
- Pleasant Ridge Investors
- Preservation Group
- QM 40
- Quail Rock Group
- Quality Minerals Partners
- Quality Stones Group
- Queen’s Cove Holdings
- Quorum Holdings Partners
- Rabbit Bar Point Investments
- Rabun Gap Partners
- Raisal Holdings
- Ranch Springs Investors
- RD Heritage Group
- RDM Land Holdings
- Regional Minerals Partners
- Reliable S&G Group
- Richland Creek Investors
- Riddle Aggregates Group
- Rising Rock Partners Investments
- River Ridge Retreat Investments
- Rivershore Sand Investors
- Riverside Preserve Holdings
- River Trace Resort Holdings
- River West SC
- Roan Creek Investments
- Roaring Florida Acquisitions
- Rock Spring Investors
- Rocky Branch Investments
- Rocky Comfort Creek Investors
- Roscoe Road Investors
- Sailfish Cove Group
- Salt Marsh Holdings
- Sand Valley Investors
- Sanibel Resort Holdings
- Seavista Resort Holdings
- Seven Hawks Investments
- Shurling Investments
- South Bay Cove Holdings
- Southeastern Argive Investments
- South Quail Woods Investors
- Spade Rock Partners
- Spring Creek 1600 Acquisitions
- Spring Hill Partners
- Sterling Land Partners
- Storey Hollow Investments
- Strategic Real Estate Opportunity Fund III
- Sunfish Cove Group
- Sycamore Fork Investments
- Tanyard Investors
- Tarpon Creek Investments
- Tater Creek Investments
- Tennessee Branch Partners
- Tennessee Ranch Estates Investors
- TH 28 Partners
- Tick Creek Holdings
- Timothy Investors
- Tom’s Mountain Creek Investments
- Toscano Investments
- Two Chip Investors
- Union Creek Investments
- Upland Creek Partners
- Vibrant Minerals Investments
- Vineyard Ridge Investors
- Vista Hill Investments
- Wahoo River Investments
- Waterway Grove Holdings
- West Lake Investments
- White Oak Investments
- White Path Investors
- White Sands Village Holdings
- Yacht Creek Investments
- Yankee Landing Holdings
- Yellowhammer S&G Group
- Yellow River Investors
- Yield Rock Group
- Zebra Creek Rock LLC
- Zenith Aggregates Partners
- Zorn Island Investments