IRS Regs Void Partnership Conservation Donations’ Deductions (2)

The IRS proposed regulations Friday on disallowing tax deductions for qualified conservation contributions made by partnerships or S corporations.

Syndicated conservation easements involve partnerships donating property development rights and then divvying up charitable deductions among investors. Donating the rights prevents others from building on the land in the future. Such donations may be deductible if the requirements of tax code Section 170(h), which defines what is considered a conservation contribution, are satisfied.

Conservation easements have increasingly faced scrutiny from the IRS which has historically argued that many deductions are often highly inflated appraisals of what the donated rights are worth. ...