Sunday, June 29, 2008

IRS Joins Colorado Conservation Easement Investigation

The Denver Rocky Mountain News reports that the Internal Revenue Service has accepted the invitation of the Colorado Division of Real Estate to join the Division's investigation of conservation easement transactions in Colorado.  The state's investigation arose because of a generous income tax credit program - up to $375,000 per easement - for landowners who agree to permanently prohibit development on their lands.  The credits can apparently be sold for cash.  The criteria for receiving the credit closely follow the federal tax law requirements for receiving a charitable contribution deduction based on a conservation easement.  The IRS is currently reviewing documents collected by the Division relating to the easements.

According to the article, the concerns arise because of possibly inflated appraisals of the value of the easements involved, as initially reported by the Rocky Mountain News in February.  Colorado Attorney General John Suthers has also opened up a criminal grand jury investigation.  Land trusts identified in the article as having received easements under review include Greenlands Reserve and Colorado Natural Land (formerly Noah Land Trust).  A spokesperson for Greenlands Reserve denied any wrongdoing.

The Denver Post has also published an article providing further details regarding the IRS investigation, including that "[o]f the more than 400 tax returns involving conservation easements that the IRS is investigating nationwide, 290 are in Colorado."

LHM

http://lawprofessors.typepad.com/nonprofit/2008/06/irs-joins-color.html

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