IRS Tax procedures and Research

Your new client is an investor in a syndicated conservation easement. The related charitable
contribution deduction claimed on the individual 1040 was entirely disallowed following the IRS’s
examination of the tax return. The case is currently pending in Tax Court.
The client has learned the IRS has offered to settle these cases. The offer follows a string of IRS
victories over investors and the related partnerships formed to purchase property for the
purpose of donating a conservation easement to an exempt organization. The IRS considers
these “abusive” transactions.
Prepare a memo that (1) briefly discusses the rules governing charitable deductions for
conservation easements. Your memo must (2) discuss at least 3 recent court cases where the
IRS has challenged those deductions in court. Take note: a number of the recent IRS “victories”
in the SCE cases are currently on appeal (and may, perhaps, be reversed).
After your review of the applicable cases and authorities, (3) summarize the advantages and
disadvantages of the IRS settlement offer.
Finally, (4) do you recommend that the client accept the settlement or continue to challenge the
disallowance (even if it requires litigation). You should justify whichever option you advise your
client to undertake.
In writing up your “memo” please address points 1-4 highlighted above.
You must rely on and cite primary sources for your positions.
The final product should be roughly 6-8 pages in length, exclusive of the footnotes & citations.

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