Conservation Easement Litigation

Cal Bomar is a former IRS Chief Counsel attorney who assist clients that are undergoing an audit relating to a conservation easements and conservation strategies.

The Firm also works extensively on cases involving the allegation of malpractice or negligence by promoters or attorneys who entered clients into these transactions.

Bomar Law Firm's principal office is in Atlanta, Georgia, but the firm helps clients throughout the United States and around the world in tax cases.

Conservation easement cases have become a primary focus of the IRS.  IRS Commissioner Koskinen's letter to the Senate Finance Committee confirmed that the IRS believes that most syndicated easement donation transactions are patently abusive

The cases can result in enormous tax assessments, interest and draconian penalties imposed.  In some cases, there can be criminal exposure.  Likewise, the attorneys or others who were marketing and setting up these transactions may be targeted by the IRS for severe penalties and other action.

In Notice 2017-10, the IRS has put taxpayers and practitioners on notice that it considers certain syndicated conservation easement transactions to be tax avoidance transaction, identifying the transactions as "listed transactions." meaning they could be considered abusive.

Section 170(e)(1) of the Tax Code allows a deduction for a qualified conservation contribution, which is a contribution of a qualified real property interest to a qualified organization exclusively for conservation purposes. The contribution should include a restriction, granted in perpetuity on the use that can be made of the real property.

The IRS asserts that that some promoters are syndicating conservation easement transactions that purport to give investors the opportunity to obtain charitable contribution deductions in amounts that significantly exceed the amount invested. In those transactions, a promoter offers prospective investors in a partnership or other pass-through entity the possibility of a charitable contribution deduction for donation of a conservation easement.

The IRS will challenge the purported tax benefits from such transactions based on the overvaluation of the conservation easement. The IRS has indicated that it may also challenge the purported tax benefits from the transaction based on the partnership anti-abuse rule, economic substance, or other rules or doctrines.

The IRS will be litigating a large number of conservation cases over the next several years. For a detailed analysis of your conservation easement case, or of a malpractice or negligence case that involves conservation easements, call Bomar Law Firm at (404) 841-6561. Cal Bomar represents taxpayers in conservation cases, as well as other tax controversies.