Being audited by the IRS? Did your broker sell you a conservation easement that the IRS is now investigating? Did you get hit with interest, penalties and fines? If your financial advisor sold you a conservation easement without disclosing these risks they may be liable for your losses. Soreide Law Group has filed several conservation easement loss cases against financial advisors and recovered significant money for our clients. Here is a brief history of conservation easements and why you should consider consulting an experienced securities lawyer who has handled these cases before. If you want to skip reading this post and just speak to a lawyer now call 888-760-6552.
What is a conservation easement?
A conservation easement provides for the preservation of property by permanently restricting development, commercial, industrial and other intrusive uses on the protected property. Typically used by landowners to permanently preserve existing natural environments and agricultural uses, conservation easements are a private action taken on private land that create a legally enforceable land preservation agreement between the landowner and a qualified land protection organization such as a land trust that is empowered and willing to enforce such an agreement. Following the recording of a conservation easement, the existing owner of the land remains the owner, and the property can be bought and sold. Use of the property is permanently restricted by the terms of the easements. Donors who follow the requirements set for in section 170 of the Internal Revenue Code (“IRC”) may be eligible for a federal income tax deduction equal to the value of their donation. The value of the easement donation, as determined by qualified appraisers, equals the difference between the fair market value of the property before and after the easement takes effect. Conservation Easements are considered by the Internal Revenue Service “IRS” to be charitable contributions and the easements must satisfy the criteria set forth by the IRS for special tax incentives.
IRS Site Conservation Easements
One major problem with a conservation easement for any investor is that the amount allowable by the IRS as a deduction with respect to a charitable contribution of the property is the value determined by the fair market value of the property donated (i.e., the price at which the property would change hands between a willing buyer and a willing seller on the date of the gift.) See Treas. Reg. Sec. 1.170A-1(c)(2).Conservation easements, however, normally are granted by deed of gift. As a result, there is rarely an established market that can be referred to in order to determine the value of the donated asset. The test the IRS will use is the fair market value of the property over which the easement was granted before the conveyance of the easement with the fair market value of the property after the easement is conveyed.
What are the Pit Falls?
Investors in conservation easements are subject to huge audit risks due to defective false and misleading appraisals. To make conservation easements attractive to investors many conservations easements “deals” dramatically over inflate the price of the donated land to maximize the tax deduction. The IRS is reappraising many of these deals and our law firm has found that the discrepancy between the IRS’ appraisal and the appraisal done by the conservation easement has been in some instances our investigation has found a value discrepancy of over 50 between the appraisals of the conservation easement and the IRS. That is a huge red flag and the IRS’ appraisal will more likely be founded in reality given that there is no incentive to artificially inflate the property value to maximize the tax deductions by the unit holders. These deals can be ripe with fraud and have discrepancies which are almost the equivalent of not being able to tell the difference between a double wide trailer and a beach front mansion.
What Conservation Easements are we investigating/watching that may have potential problems with the IRS?
Here is a list of conservation easements that we are investigating. Not all of these are being audited and may never be audited but this is a comprehensive list of conservation easements that the IRS may take issue with, not all of the following conservation easements were sold by Green Vista Capital:
So what can you do about it?
Several brokerage firms are under investigation by Soreide Law Group for selling bad conservations easements now under audit by financial advisors which include but are not limited to Green Vista Capital, LLC, and others. If you were sold a conservation easement that is under audit from the IRS or recently disallowed by the IRS visit https://www.SecuritiesLawyer.com. Click for more conservation easement info. An experienced securities attorney can file a claim against the financial advisor that sold the deal without doing adequate due diligence into the validity of the appraisal. Given that many of these representatives are FINRA registered representatives the lawsuit will be filed in the FINRA forum against the brokerage firm the representative worked for. Soreide Law Group handles claims in the FINRA forum nationwide and if you feel you were a victim of a conservation easement fraud sold to you by a financial advisor call 888-760-6552. We offer free consultations and there is no fee if we do not recovery money.
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