IRS Cracks Down on Breaks in Land of Rich Americans
Behind the glazed white terra cotta facade of the Ritz-Carlton hotel in New Orleans is a 16-year legal battle with the Internal Revenue Service.
The developers of the hotel, which is housed in a former department store on the edge of the French Quarter, say their promise to preserve the century-old facade entitles them to a $7.4 million deduction. The U.S. tax agency disagrees.
In this case and dozens like it, the IRS is challenging a complex and obscure tax break that benefits some of the nation’s wealthiest property owners. Without giving up land, they donate the hard-to-calculate value of a perpetual promise to leave the property undisturbed. For that, they claim a big tax deduction.
“They’re overwhelmingly to high-end individuals and provide little to no benefit to the public,” said Dean Zerbe, who examined easement donations as a Republican aide on the Senate Finance Committee. “I don’t know if I could design a tax break that’s more targeted toward the millionaire set.”
The conservation easement break is one of hundreds scattered throughout the tax code that members of Congress are reviewing as they consider making the most significant revisions since 1986. The lawmakers are looking for ways to curtail breaks that benefit the richest Americans to offset the revenue that would be lost through lower tax rates.
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http://www.bloomberg.com/news/2013-11-06/irs-cracks-down-on-breaks-in-land-of-rich-americans.html