The Billion-Dollar Loophole The most generous charitable deduction in the federal tax code is being manipulated to make big profits — and there’s no sign that Congress has any intention of fixing the problem. Article by ProPublica and Fortune.
“The idea seems like the perfect marriage of environmentalism and capitalism: Landowners give up their right to develop a piece of property, and in exchange they receive a special tax deduction. Nature is preserved and everybody benefits. That’s traditionally how what are known as “conservation easements” worked…A growing number of recent easement donations, however, are driven by a more commercial reward — an outsized tax deduction for wealthy investors. Known as “syndications” (or “syndicated partnerships,” since they’re typically offered in that structure), they’re deals orchestrated by middlemen with the goal of big payoffs for all of the participants, many of whom have never visited the land in question…The use of syndicated easement deductions has exploded in recent years, according to Brookings Institution economist Adam Looney, who began researching the subject while serving as a top tax official in the Obama Treasury Department. They cost the Treasury between $1.2 billion and $2.1 billion, he estimates, in lost tax revenue last year…”