Understanding the IRS’s Battle Against Syndicated Conservation Easement Transactions

Since 2016, the IRS has sought to categorize syndicated conservation easement transactions (SCETs) as “listed transactions,” a designation that necessitates specific reporting requirements and allows the IRS to levy heavy fines on individuals and organizations it finds to have misrepresented the value of their SCET investments. The IRS has taken this extraordinary step to crack down on what the agency believes is a rampant overvaluation of SCET investments by pass-through entities hoping to exploit the tax benefits offered by conservation easements.
The IRS’s decision has infuriated many organizations who feel the agency is unfairly targeting their investments, and some have taken the IRS to court to fight back against the heavy fines they’ve received. Earlier this year, the U.S. Tax Court ruled against the IRS in Green Valley Investors LLC v. Commissioner in a case that will have far-reaching effects on how the agency will handle SCETs in the future.

Attorney Hale E. Sheppard has covered this topic and the resulting court case in-depth in his article, “Easement Evolution: Proposed Regulations, New Law, and Public Comments,” published in Tax Notes Federal. The Vistia Capital team believes Mr. Sheppard’s article does a fantastic job covering this topic in exceptional detail and is an excellent resource for understanding the Tax Court’s reasoning in deciding this case. We invite you to read the article by clicking the link below.

If you have any questions about SCETs or how the IRS may view these investments in the future after reading Mr. Sheppard’s article, our team is here to help. Schedule a consultation with an investment specialist to learn more about your SCET options.



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