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Only if these collateral technical attacks fail will the IRS then generally resort to attacking the valuation issues surrounding the conservation easement contributed. In that regard, the IRS will generally advance the following types of arguments:A. Highest and Best Use
The IRS will attack the conclusion reached in the appraisal over the highest and best use of the property. It does this by attempting to show that the use determined is either not physically possible, legally permissible, financially feasible or maximally productive.55
The IRS will attempt to argue that the analysis provided by the taxpayer’s qualified appraiser in their qualified appraisal report concerning sales of comparables is flawed, incomplete or just plain wrong.57VI. Settlement Options
Spurred on by numerous victories in the United States Tax Court and other courts relying upon many of the technical and valuation arguments mentioned above, the IRS recently announced a settlement initiative for investors involved in such transactions. The terms of this settlement are onerous requiring taxpayers to concede all the tax benefits claimed and imposes penalties and other terms as follows:58
Following the IRS’s lead the Office of Chief Counsel also recently released a Notice explaining the settlement terms for syndicated conservation easement cases currently pending in the United States Tax Court with terms slightly different and even less favorable to taxpayers than the settlement initiative offered by the IRS.59VII. Conclusion
Participants in Syndicated Conservation Easements face significant technical and valuation hurdles in being allowed to claim their deductions. One should always seek competent legal advice to be able to successfully wade through the thicket of laws and requirements necessary for such an easement to meet the requirements required by law. We here, at the Brager Tax Law group are willing and able to assist you in such an endeavor.