Originally published on December 6, 2022, by the IRS.
The Treasury Department and Internal Revenue Service today issued proposed regulations identifying certain syndicated conservation easement (SCE) transactions as "listed transactions" – abusive tax transactions that must be reported to the IRS.
In these transactions, investors typically acquire an interest in a partnership that owns land and then claim an inflated charitable contribution deduction based on a grossly overvalued appraisal when the partnership donates a conservation easement on the land.
The IRS previously identified certain SCE transactions as listed transactions in Notice 2017-10. Recent court decisions in the Sixth Circuit and the U.S. Tax Court ruled that the IRS lacks the authority to identify listed transactions by notices, such as Notice 2017-10, and must instead identify such transactions by following the notice and public comment procedures that apply to regulations.