Oak Brook Tax Accountant
It’s getting much tougher to successfully claim a charitable deduction for a conservation easement. Unfortunately, this will further erode the construction of new golf course projects in 2016 and beyond.
Typically, a new golf course project will make consideration plans to conserve and protect the natural habitat of fish, wildlife, and natural ecosystem by preserving open space for the scenic enjoyment of the general public. These easements often amount to sizeable charitable deductions which help offset the investment.
Although the IRS has lost several conservation easement cases regarding golf courses, they turned the tide in 2003 and 2005 and have become more aggressive fighting these situations. In 2003 and 2005, the IRS went to Tax Court over two North Carolina golf course easements. In both instances, the IRS disagreed with the taxpayers over charitable deductions. The court, the IRS stated that “fairways, tee boxes and greens … are sodded or planted with 419 Bermuda and Tidwarf, which are nonnative grasses and consequently do not provide a relatively natural habitat for the pitcher plants and Venus flytraps.” Additionally, the court found that the use of pesticides, insecticides, fungicides, herbicides and fertilizers not only does not preserve the natural habitat, but actually “injures or destroys” the habitat. And, being part of a gated community that is not open to the general public does not provide scenic enjoyment for the general public. In both cases, the IRS won.
In 2009, a coastal Alabama golf course project, Kiva Dunes, won a three year court battle which vindicated their $28.7M tax break in exchange for leaving 141 acres of land undeveloped. This setback created a round of legislative changes aimed at banning golf course easements altogether. Fortunately, this effort was blunted by the golf industry.
Since the beginning of 2014, there have been 19 cases heard in US Tax or federal district court regarding conservation easements for golf courses.
If you are seeking to lower your tax obligations legally and would like assistance, call Michael Kimmey & Associates at 708-687-2917 or 630-581-7007.
Tax extenders are a group of fifty tax breaks that apply not only to small businesses but teachers and individuals as well. What you need to be concerned with are those that apply directly to small businesses. While these tax breaks are temporary in nature, they can have a serious impact on how you conduct your business for the next year.
In 2013, these tax breaks actually expired on December 31st, but the United States Congress retroactively extended the tax breaks into 2014. They typically do this at the last moment of the year, or right after the first of the new year, making it difficult for small businesses to plan ahead. These tax breaks are also only renewed for one year meaning they will have need to extend them again before the end of 2014, so they can carry over into 2015.
Currently, the tax extenders for small businesses include such items as a work opportunity tax credit of $1,375, a 15-year straight line cost recovery for qualified leasehold improvements for restaurant and retail establishments of $2,382, and bonus depreciation of $1,492.
Additional tax extenders include:
- Exclusion of 100% of gain on certain types of small business stocks
- A reduction in the S Corporation recognition period for built-in gains tax
- Qualified zone academy bonds
- An employer wage credit for activated military reservists
- A new market tax credit
While not all tax extenders are good policy for the government or businesses, some of the tax breaks do help level the playing field and provide companies a way to define actual business expenses with less effort.
If you are tired of overpaying taxes, call 630-581-7007 or 708-687-2917 and ask for Michael Kimmey.
Michael Kimmey & Associates is a Tax and Accounting Firm operating for over 35 years. Our firm services small businesses and individuals throughout Chicago. Our offices are located in Oak Brook and Orland Park.