What started out as a noble idea where landowners gave up their right to develop a property in exchange for receiving a special tax deduction has evolved into what the IRS calls a Tax Avoidance Scheme (TAS).
The IRS included Syndicated Conservation Easements on their "Dirty Dozen List of Tax Scams to Avoid."
The IRS releases a new list every year & says the "Dirty Dozen" represents the "Worst of the Worst Tax Scams."
If you are involved in a Conservation Easement, then HK CPAs will not prepare your tax return. Why?
Because abusive Conservation Easements allow tax deductions that far exceed the amount invested by many times.
Conservation Easements are technically legal...but some violate one of the most basic principles of deductions on a tax return:
A Deducted Loss or Itemized Deduction CANNOT exceed the amount invested or contributed.
Here's an example cited in one of the links below:
The former Millstone Golf Course outside of Greenville, South Carolina. Closed back in 2006, it sat vacant for a decade. Abandoned irrigation equipment sat on the driving range. Overgrowth shrouded rusting food and beverage kiosks. The land’s proximity to a trailer park depressed its value. In 2015, the owner put the property up for sale, asking $5.8 million. When there were no takers, he cut the price to $5.4 million in 2016.
Later in 2016, however, a pair of promoters appeared. They gathered investors who purchased the same parcel at the market price and, with the help of a private appraiser, declared it to be worth $41 million, nearly eight times its purchase price. Why? Because with that new valuation and a bit of paperwork, the investors were suddenly able to claim a tax deduction of $4 for each $1 they invested.
Here's more information on Conservation Easements.