DOJ is sending a message to tax professionals – particularly CPAs – who are involved in the syndicated conservation easement (SCE) industry. The message is “Be afraid. Be very afraid.” That is my reading of a recent press release about Georgia CPA Herbert E. Lewis indicted for SCE schemes involving fraudulent charitable contributions.
DOJ releases like to lay it on thick noting that Lewis is indicted on one count of conspiring to defraud the United States, 24 counts of wire fraud, 32 counts of aiding and assisting in the preparation of false federal tax returns and 5 counts of filing false federal tax returns. They go on to add that he faces five years on the conspiracy charge, twenty years on each wire fraud count, three years on each aiding and assisting count and three years on each false filing count. You can do the math if you want. It runs into centuries.
About Syndicated Conservation Easements
Generally you cannot take a charitable deduction for donating a partial interest in property. A “qualified conservation contribution” (QCC) is an exception to that ruled. You can take a deduction for a “restriction granted in perpetuity” (an easement) on real property to a qualified organization. Quite often the organization is a land trust.
Since there is not a lot of buying and selling of easements, the deduction is usually the fair market value (FMV) of the property before the easement less the FMV…