 Internal Revenue Service IRS tax news. Treasury and IRS propose regulations identifying syndicated conservation easement transactions as abusive tax transactions. Honestly, the term abusive tax transactions is a little strange, isn't it? I mean, I'm not saying we shouldn't stop tax fraud or anything, but phrasing it as if you're the one abusing taxes is a little funny. I mean, I thought the taxes were abusing me. Abusive tax transactions. I mean, that's like Amber Heard charging Johnny Depp with abusive spousal treatment while he staggers around looking for his missing finger. When in actuality, the noble pirate sacrificed his finger in order to prevent the half full vodka bottle from exploding as it flew through the air and hit the counter because like if the last vodka bottle exploded, they would have both had to resort to spilling Red Bull in the same place on the floor so they could both get on all fours and like suck the vodka Red Bull directly out of the rug, which isn't at all dignified behavior, even for a pirate. Although it might give the carpet a nice disinfected shine to it. Anyways, abusive tax transaction. It's a silly phrase. I mean, maybe taxes are more like the club used by the government to abuse. So like saying that you're the one abusing the taxes is like saying you abuse like the hickory stick used to wrap your knuckles by your fifth grade teacher because you couldn't spell the word sugar correctly. How dare you deny the hickory stick a piece of your hide. That's that's hickory stick abuse. Dang it. It's like no have mercy. I just don't understand why sugar doesn't start with an SH. Anyways, first to joke. Honestly, Mother Earth is a large lady. Excuse me. But am I invisible? Possibly from Pluto. But for some reason living off the fat of the land is still difficult. You know, I think it's because we live on the face of Mother Earth. I can't eat that crap. And therefore we're trying to like sustain ourselves by eating Mother Earth's face fat. And so miss. And I mean, it's difficult to get by eating just face fat, you know, as I was saying, I'm just not going to take anything unlike you with a buffet. I mean, the face doesn't have much fat on it, even with really large people. So what do you have for me? Some men in speed stick in my desk. Even strange carnivores like the liver King don't eat much face fat. Like I don't think I challenge you to watch the liver King without feeling the urge to vomit. I can only imagine that in heaven, God will reveal Mother Earth's thigh for us to live on. So we could like move from Mother Earth's face to like her thigh. I mean, can you believe that? I mean, how easy would it be to live off the fat of Mother Earth's thigh after trying to scrape by a living on just Mother Earth's face fat? Can you imagine? I mean, we're just going to be like kicking it on Mother Earth's thigh like, wow, look at those poor fools stopping around on Mother Earth's face, trying to live off face fat. And yes, I know once we move to Mother Earth's thigh, it's like, wow, I can't wait until we can move up to Mother Earth's left breast. But any case, I'll stop there. IR 2022 dash 214 December 6 2022 Washington, the Treasury Department and Internal Revenue Service today issued proposed regulations. There's a link to that here. Identifying certain syndicated conservation easement, SCE transactions as quote listed transactions in quote, abusive tax transactions that must be reported to the IRS. So the IRS has basically been building their case and giving kind of warnings related to the syndicated conservation easement to transactions. Let me just give my overall kind of thought process in terms of some of these areas that might be kind of like in the gray area of the tax law. Clearly, when you look at the tax law, we've note and we've stated in prior presentations in prior news articles from the IRS, we're only required to pay the taxes that were required to pay under the tax law. Some things under the tax law are pretty clear. They're black and white. Other things there's gray areas. So you might say, okay, I don't know exactly what to do because the tax law law is not addressing this particular thing exactly. And then that's where some people could get try to get more aggressive in terms of their stance. And those are usually the areas where the IRS is going to push back because now you are interpreting the tax law one way. The IRS you can you can assume will will interpret the tax law another way in a more strict way. And then it'll go to tax court oftentimes. And if there's not something that's addressed directly in the law, then it's going to be ironed out in like a series of court cases, right? Because that's going to be precedent. So the law is going to be the major precedent. And then and then if something's in the gray area, then you build a record possibly of court cases and so on, and so forth. And so on those kind of areas, then when the IRS is trying to build their case, they're going to be saying, Hey, look, we're going after these particular things that we think are abusive, a misinterpretation of the law. And if they're winning under our court cases and whatnot, then their position becomes stronger and stronger. And and and that's and that's how you might want to kind of think about it. So now the the iris is basically, it seems to me saying, Hey, look, we have a strong case on these, these types of transactions. And we're looking at not only are we looking into them, but we think that we can prosecute on them, we think that we can execute and win, you know, the case and as their case gets stronger, the more and more they have the leeway to do that. Now, as that happens, then, of course, the IRS would like to encourage people to voluntarily tell say what they've been doing in those cases and amend their return, or make any changes that they need to do. And that makes sense, because the iris is trying to get people to comply with the tax code. So now they're saying, if you're involved in these kind of things, which we are now saying have been abusive, we've interpreted them to be that. And so we think we have a strong case, we want you to self report the that fact and we won't you won't get possibly as much as harsher penalty would be the general idea. So that seems that's my interpretation of what kind is going on here. So so in these transactions, investors typically acquire an interest in a partnership that owns land, and then claim an inflated charitable contribution deduction based on a grossly overvalued appraisal when the partnership donates a conservation easement on the land. So notice that this whole thing kind of depends to some degree on you know, you got a charitable donation, it seems that does of course seem a little shady to take this large bloated charitable donation based on an estimate. And we know that estimates that are appraised on land, one of the problems with land buildings and whatnot is that they're hard to know what the value is over time appraisals can can vary greatly because land is unique in nature. So now that's that that ambiguity can lead people. That's what's kind of you know, that's kind of the leading factor of how this abuse can can move forward. So the IRS previously identified certain SCE transactions as listed transactions in notice 2017 dash 10. There's a link to that here. Recent court decisions in the Sixth Circuit and the US Tax Court rule that the IRS lacks the authority to identify listed transactions by notices such as notice 2017 dash 10 or 2017 10 and must instead identify such transactions by following the notice and public comment procedure that apply to regulations. Treasury and the IRS disagree with these decisions. So there's a link to that here. So if you've been following the court cases, you might you might have saw that and said, wow, that it looks like the IRS is losing on that particular place. And now the IRS is is not done. They're saying, Hey, we're still gonna we're still fighting on this, this particular issue. So the Treasury and the IRS disagree with this decision. There's a link to that here and continue to defend notice 2017 dash 10 and similar notices and litigation, except in the Sixth Circuit. So at the same time, however, Treasury and IRS issued the proposed regulations to eliminate any conservation regarding the need to report these transactions and to ensure that these decisions do not disrupt the IRS's ongoing efforts to combat abusive tax shelters throughout the nation. Treasury and the IRS intend to finalize these proposed regulations after due consideration of public comments in 2023 and intend to issue proposed regulations identifying additional listed transactions in the near future. So it's going to be interesting what happens with that. So now they're going back and forth and the IRS is is not giving up on their case and they're telling us so so you know, we'll have to say so you might want to get advice at least if you're in a situation where you where you where you think this might be applying you and make sure that you have a a reasoned decision making process and whatever tax position that is that you're taking