New proposals issued in December on conservation easement tax regulations may have unintended consequences for the donee community. Atlanta-based Senior Counsel Erin Hines explains in an article that published in Bloomberg Tax on April 23.
The IRS is considering the removal of a provision stating that a done organization is not treated as a material advisor. Being treated as a material advisor, as noted in Section 4965, will create additional disclosures and list maintenance obligations, the failure of which may result in penalties having greater consequences for donee organizations – potentially deterring some organizations from accepting conservation easement donations altogether.
Additionally, a donee organization may have to file a disclosure statement for each prohibited transaction, a difficult and potentially burdensome requirement as donee organizations must assess whether the easement qualifies as syndicated.
