Conservation easements, in which landowners can earn tax deductions for preserving their open land, are rife with abuse, the IRS says. That's why the IRS is cracking down on these tax goodies for wealthy landowners. The IRS has already fingered 240 taxpayers for audits relating to this tactic, with another potential 100 donors on the hit list.
In conjunction with IRS efforts, Congress is pushing legislation that would restrict deductions for conservation donations. The proposed reforms focus on valuation methods, improving the appraisal process and monitoring easements. We should know more about the legislation's fate in the next few weeks.
Advice: Don't throw in the towel on conservation easements just because of this crackdown. There's still a time and a place for legitimate donations of conservation easements.
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