Conservation Easement Investments: A Red Flag with the IRS — Updated July 2026

Conservation Easement Investment Losses | IRS Red Flag

Updated July 23, 2026

The IRS announced a new time-limited settlement offer in May 2026 for taxpayers caught up in syndicated conservation easement disputes — the clearest signal yet that the agency’s seven-year campaign against these deals is not slowing down. More than 1,100 syndicated conservation easement cases remain pending in the U.S. Tax Court and under IRS examination. The White Law Group is investigating the liability that sales agents and broker-dealers may have for improperly recommending these private placements to investors, and our FINRA arbitration attorneys are currently representing investors pursuing claims tied to these offerings.

What Is a Syndicated Conservation Easement?

A conservation easement is a legal agreement that permanently restricts development on a parcel of land in exchange for a federal charitable contribution tax deduction equal to the value of the development rights given up. Used as intended, this is a legitimate conservation tool.

A syndicated conservation easement is different. In a typical syndicated deal, a promoter forms an entity to acquire raw land, then sells fractional membership interests to outside investors through a private placement. After the investor group closes on its interest, the entity places a conservation easement on the property and obtains an appraisal valuing the easement — often at many multiples of what the promoter recently paid for the land. Investors then claim a pass-through charitable deduction proportional to their investment, frequently marketed as a ratio of $4 to $4.5 (or more) in tax deductions for every $1 invested.

The math is the pitch: a $100,000 investment could hypothetically generate $400,000 or more in tax deductions. The IRS’s position, upheld repeatedly by the Tax Court, is that many of these appraisals are inflated and that investors are not really buying land — they are buying tax deductions.

How We Got Here: A Timeline of IRS and DOJ Enforcement

Syndicated conservation easements have been under escalating scrutiny for years:

2019: The Senate Finance Committee opened an investigation into syndicated conservation easement transactions after the Brookings Institution estimated they cost the federal government more than $3 billion in 2014 alone, with the figure growing each year. The IRS has separately stated that between 2010 and 2017, these deals generated more than $26 billion in claimed charitable contribution deductions.

2022: Congress passed the Charitable Conservation Easement Program Integrity Act, generally limiting the deduction available in a syndicated conservation easement transaction to 2.5 times a partner’s basis in the partnership, closing off the most aggressive versions of the tax play going forward.

2023: A federal jury convicted promoters Jack Fisher and James Sinnott in the Department of Justice’s first criminal trial over allegedly abusive syndicated conservation easements. According to the DOJ, the scheme generated nearly $1.4 billion in fraudulent deductions and cost the IRS more than $450 million. Ten additional co-conspirators pleaded guilty, with sentencings continuing into 2025. That same year, promoter EcoVest Capital agreed to pay $6 million to resolve related DOJ claims.

2024: Fisher and Sinnott were sentenced to 25 and 23 years in federal prison, respectively. The IRS also issued final regulations formally designating certain syndicated conservation easement transactions as “listed transactions,” triggering strict disclosure obligations for participants and their advisors.

2026: The Tax Court continues to reject inflated valuations in case after case (see below), and in May 2026 the IRS rolled out a new, time-limited settlement initiative aimed at clearing its backlog of pending disputes.

Recent Tax Court Rulings Are Not Going Investors’ Way

The Tax Court has allowed, on average, only about 6% of the deduction amounts originally claimed in litigated syndicated conservation easement cases, typically coupled with a 40% penalty for gross valuation misstatement.

A recent example: in March 2026, in Hancock County Land Acquisitions, LLC v. Commissioner, the Tax Court rejected a $180,177,000 claimed charitable deduction tied to a transaction sponsored by Webb Creek Management Group, allowing only $2,183,000 — roughly 1% of what was claimed — and imposing 40% and 20% accuracy-related penalties. The court found that the investors who purchased units in the offering “were not purchasing land; in substance, they were purchasing tax deductions.” Similar outcomes have followed in other recent cases, including Glade Creek Partners, LLC v. Commissioner and N. Donald LA Property, LLC v. Commissioner.

The IRS’s 2026 Settlement Initiative

On May 13, 2026, the IRS announced the terms of a new time-limited settlement offer (IR-2026-65) for taxpayers with eligible conservation easement or historic preservation easement disputes, whether their case is already docketed in Tax Court or still under IRS examination. Taxpayers who receive an offer generally have 90 days from the mailing date to accept.

Under the terms reported by tax practitioners, participating investors would generally be limited to deducting only the partnership’s actual out-of-pocket costs — not the appraised easement value — and would pay a 10% penalty. For many investors, that means giving up the deduction that was the entire premise of the investment, while still owing a penalty on top of it. Investors who receive a settlement offer, or who are concerned they may, should discuss the offer with a qualified tax professional before responding, and should also evaluate whether the loss stems from a broker’s unsuitable recommendation — a separate question from how to resolve the audit itself.

Broker-Dealer Suitability and Due Diligence Obligations

Syndicated conservation easements are typically sold as unregistered Regulation D private placements, either through independent broker-dealers or directly by the attorneys and accountants who structure the syndications. These offerings often carry high sales commissions, which can create an incentive to sell them regardless of whether they are appropriate for a given investor.

FINRA-registered broker-dealers are required to perform reasonable due diligence on any investment they recommend and to ensure the recommendation is suitable in light of the investor’s age, risk tolerance, net worth, financial needs, and investment experience. A broker who fails to disclose the risk of IRS disallowance, misrepresents a syndicated conservation easement as a low-risk tax strategy, or recommends an outsized concentration in an illiquid private placement may be held liable for the resulting losses in a FINRA arbitration claim.

Conservation Easement Offerings Under Investigation

The White Law Group is investigating potential claims against sales agents and brokerage firms that sold interests in the following conservation easement offerings, among others. If you invested in an entity on this list, or in a similarly structured offering not listed here, contact us to discuss your options.

How The White Law Group Can Help

The securities attorneys at The White Law Group represent investors nationwide in FINRA arbitration claims against the brokerage firms that sold them syndicated conservation easement private placements. If your broker failed to conduct adequate due diligence, did not disclose the risk of IRS disallowance, or recommended an investment that was unsuitable given your financial situation, you may be able to recover your losses through a FINRA arbitration claim. This applies whether you are already facing an IRS audit, have received a settlement offer, or are still holding an easement investment you are concerned about.

Frequently Asked Questions

What is a syndicated conservation easement?
A syndicated conservation easement is a private placement in which a group of unrelated investors pools money to buy an interest in an entity that owns land, places a conservation easement on that land, and passes a charitable contribution tax deduction through to the investors, often at a promised ratio of several dollars in deductions for every dollar invested.

Why does the IRS treat these deals as a red flag?
The IRS has found that many syndicated conservation easement transactions rely on appraisals that significantly overstate the value of the land, are marketed primarily for their tax benefits rather than genuine conservation purposes, and have resulted in disallowed deductions, back taxes, interest, and penalties of up to 40% for investors. Certain of these transactions are now formally designated as “listed transactions” subject to IRS disclosure rules.

What can I do if my broker recommended one of these investments?
If a FINRA-registered broker or investment advisor recommended a syndicated conservation easement without adequately disclosing the risks, or without regard to whether it was suitable for your financial situation, you may be able to pursue a FINRA arbitration claim against the brokerage firm to recover your losses. Contact The White Law Group to discuss your specific investment and options.

Free Consultation

If you have invested in a conservation easement (tax shelter land deal) and would like to speak to a securities attorney about the potential to recover your investment losses, please call The White Law Group at (888) 637-5510 for a free consultation, or visit our contact page to get started online.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington. To learn more about The White Law Group, visit whitesecuritieslaw.com.

This post discusses matters under investigation and pending litigation. References to specific offerings, sponsors, or transactions describe allegations, publicly available IRS and court records, or matters of public record, and do not constitute a determination of wrongdoing by any individual or firm.