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Treasury Has Issued Proposed Regulations Identifying Syndicated Conservation Easements As “Listed Transactions”

The IRS responded swiftly to the Tax Court’s recent decision, Green Valley Investors, LLC, et al. v. Comm’r, 159 T.C. No. 5 (Nov. 9, 2022), which invalidated IRS Notice 2017-10, identifying syndicated conservation easements as “listed transactions,” on the ground that the Notice violated the prior notice and comment requirements of the Administrative Procedure Act (APA). On December 6, 2022, the IRS issued proposed regulations, IRS. Doc. No. 2022-26675, 87 F.R. 75185, that follow its previous Notice. Written comments and requests to speak are due by February 6, 2023, and a public hearing will be held by teleconference on March 1, 2021. In a News Release of the same date, IRS IR-2022-214, Treasury and the IRS said that the government would “continue to defend Notice 2017-10 and similar notices in litigation except in the Sixth Circuit,” where the court voided an IRS notice on the same APA ground. See Mann Construction, Inc. v. U.S., 27 F.4th 1138 (2022). The IRS said that it was issuing its proposed regulations “to ensure that these decisions do not disrupt the IRS’s ongoing efforts to combat abusive tax shelters throughout the nation.”