Syndicated Conservation Easements
- Typical userAwareness only - an IRS listed transaction
- IRS scrutinyRed
- Sponsors2
Overview
Investors buy into a partnership that donates a land easement and claims a deduction far above what they invested.
IRS scrutiny
Rules, risks and sources
Key risks
Disallowance, 40% gross valuation misstatement penalties, disclosure penalties, criminal exposure for promoters. Courts keep ruling against these deals: on Oct. 19, 2026 the Tax Court cut two Georgia SCE deductions claimed at $8.1M and $11.1M to $115,300 and $208,500 and applied the 40% penalty (Watson Lake Investments, T.C. Memo. 2026-106; the deals were marketed at a 4.5:1 deduction-to-investment ratio), and disallowed historic-facade easement deductions for failing the perpetuity requirement, with gross-valuation penalties (Del Monte LLC, T.C. Memo. 2026-107). The IRS created an Office of Conservation Easements on Aug. 19, 2026 and ended uniform settlement offers (IR-2026-95); under the May 13, 2026 initiative, cases not settled in the offer windows are resolved on hazards of litigation, 'in general' about 5%-7% of the claimed deduction with a 40% penalty (IR-2026-65).
Primary sources
- IRS Listed Transactions page
- T.D. 10007, Syndicated Conservation Easement Transactions as Listed Transactions, 89 FR 81341 (Oct. 8, 2024)
- Final regs, statutory disallowance (SECURE 2.0 §605), 89 FR 54284 (June 28, 2024)
- 26 U.S.C. §170 (LII; incl. §170(b)(1)(I) 0.5% floor, §170(h)(7) 2.5x rule)
- IRS IR-2026-30, Dirty Dozen 2026 (Mar. 5, 2026)
- Watson Lake Investments, T.C. Memo. 2026-106 (Oct. 19, 2026), U.S. Tax Court docket No. 13696-20
- Del Monte LLC, T.C. Memo. 2026-107 (Oct. 19, 2026), U.S. Tax Court docket No. 3411-21
- IRS IR-2026-95, Office of Conservation Easements (Aug. 19, 2026)
- IRS IR-2026-65, time-limited settlement terms (May 13, 2026)
Facts checked 2026-10-20.
Common questions
Does the IRS treat syndicated conservation easements as listed transactions?
Yes. Notice 2017-10 and final regulations published October 8, 2024 identify them as listed transactions. For contributions after December 29, 2022, the law also disallows a pass-through's easement deduction that exceeds 2.5 times the partners' relevant basis, with limited exceptions.
Sources: T.D. 10007, 89 FR 81341 (Oct. 8, 2024); 26 U.S.C. §170(h)(7)
How have recent Tax Court cases turned out?
Badly for investors. On October 19, 2026 the Tax Court held that two Georgia partnerships that claimed easement deductions of $8,109,000 and $11,116,000 were entitled to $115,300 and $208,500, and applied a 40% gross valuation misstatement penalty (Watson Lake Investments, T.C. Memo. 2026-106). The same day it denied historic facade easement deductions because the easements were not protected in perpetuity (Del Monte LLC, T.C. Memo. 2026-107).
Sources: U.S. Tax Court, Watson Lake Investments, T.C. Memo. 2026-106 (docket No. 13696-20); U.S. Tax Court, Del Monte LLC, T.C. Memo. 2026-107 (docket No. 3411-21)
Is the IRS still offering settlements?
Yes, but only on request. On August 19, 2026 the IRS stopped sending uniform settlement letters and created an Office of Conservation Easements. Taxpayers with pending cases can still ask their assigned IRS examination or Chief Counsel representative for an offer under the May 13, 2026 framework: no charitable deduction, a deduction for roughly the partnership's out-of-pocket costs, and a 10% penalty if accepted within 90 days. The IRS says the Tax Court has on average allowed 6% of the original claimed deduction and has generally imposed a 40% penalty.
Sources: IRS IR-2026-95 (Aug. 19, 2026); IRS IR-2026-65 (May 13, 2026)
Sponsors that offer this strategy
- EcoVest Capital, Inc. Unclaimed 32/100 · Serious concerns Public record
- Strategic Capital Partners, LLC Unclaimed 11/100 · Serious concerns Public record
Advisors who offer this strategy
None listed yet.