IRS's disallowance of a charitable cons

Two opinions issued recently by the Tax Court addressed different arguments made by a taxpayer challenging the IRS's disallowance of a charitable conservation easement deduction. In a memorandum opinion, the Tax Court upheld the IRS's disallowance of a partnership's deduction for the conservation easement because the conservation purpose of the easement was not preserved "in perpetuity" under Regs. Sec. 1.170A-14(g)(6)(ii), which prescribes the relative value of a donee's property rights and entitlement to proceeds from any extinguishment of the easement and subsequent sale or other disposition of the property. In a separate reported opinion, the Tax Court rejected the taxpayer's argument that Regs. Sec. 1.170A-14(g)(6)(ii) was an invalid regulation. According to the court, the regulation had been properly promulgated under the Administrative Procedure Act (APA), and its substance was valid under the two-part Chevron test (Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984)). Micro-captives are captives with $2.2 million or less in premium. The IRS has been warning about these micro-captives for several years and placed them on its annual “Dirty Dozen” list of tax scams. The IRS has consistently disallowed the tax benefits claimed by taxpayers in these micro-captive structures. If you are in a captive or conservation easement you will be audited. Get help ASAP. Google Lance Wallach and your advisor, who do you trust?