Page 23 - ur local cpa

BOGUS TAX AVOIDANCE

STRATEGIES

- Micro-capt ive insurance arrangement s: A micro-captive

is an insurance company whose owners elect to be taxed on
the captive's investment income only. Abusive micro-captives
involve schemes that lack many of the attributes of

legitimate insurance. These structures often include
implausible risks, failure to match genuine business needs
and, in many cases, unnecessary duplication of the

taxpayer?s commercial coverages.
- Syndicat ed conservat ion easement s: A conservation
easement is a restriction on the use of real property.

Generally, taxpayers may claim a charitable contribution
deduction for the fair market value of a conservation
easement transferred to a charity if the transfer meets the
requirements of Internal Revenue Code 170. In abusive

arrangements, which generate high fees for promoters,
participants attempt to game the tax system with grossly

inflated tax deductions.