IRS Takes Extreme Position Regarding “Commercial Forestry” in Conservation Easement Disputes: Getting to the Root of the Matter




The IRS continues to attack partnerships that donate conservation easements and pass the corresponding charitable tax deductions to their partners. One of its favorite methods is to raise a number of “technical” arguments, which ordinarily focus on alleged problems with a deed of conservation easement (“Deed”). A victory on a technicality creates a windfall for the IRS in the sense that it eliminates all the tax benefits for the partners without obligating the IRS to address thornier substantive issues, like easement valuation.

In light of this reality, the IRS continues to introduce new “technical” arguments, such as a blanket assault on “commercial forestry.” In a recent Tax Court case, TOT Property Holdings, LLC, the IRS took the position that conservation easements and commercial forestry are “inherently inconsistent” and simply “cannot coexist.” The Tax Court did not rule on the matter, as the case was resolved on other grounds. Therefore, this important issue remains open. 

Listen in to learn more about:

  • The conservation easement donation process.
  • Categories of attacks typically employed by the IRS.
  • Main issues in TOT Property Holdings.
  • Potential flaws with the IRS’s stringent position on “commercial forestry.”

About Hale E. Sheppard

HALE E. SHEPPARD, Esq. (B.S., M.A., J.D., LL.M., LL.M.T.) is a Shareholder in the Tax Controversy Section of Chamberlain Hrdlicka and Chair of the International Tax Group.

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