I suddenly knew that all our optimism had been for naught and that things were going to turn out very badly for us.

But would it? We were depressed and discouraged and, frankly, exhausted. We had started the partnership in 1996 thinking we would just turn around and sell it quickly for a small profit. Here we were 12 years later, and Stan and I were working constantly on spreadsheets and taxes and C.E. paperwork.
In addition, we saw we saw articles such as the attached, which made us wonder what was really going on. (“Nonprofit pays off in easements: State has subpoenaed records in probe into possible abuses,” [See link below to reach a copy of the article in .pdf.]) We read these types of articles with wonder, because it didn’t compute with the person we thought Todd was…and, as naïve as we may have been, 1) by this time we had already done 15 conservation easements – we couldn’t exactly undo them, and 2) we still couldn’t fathom how this related to our easements. Whatever the accusations in the article were about the Noah Land Trust, it didn’t seem related to the reality we had experienced with them, with formal documents, and so on. And, as I write this today in August of 2016, I don’t believe Noah Land Trust has ever been “undone.”But, you can understand why we began to think that even though we had spent considerable sums of money developing another set of conservation easements for 2007, we needed to stop pursuing them as an option and move on. But what about the rest of the land?
For Sale
In our exhaustion, we decided to just “fire sale” the land, unload it for a low price, and be done with it all.
On May 21, 2008, we contacted Todd’s office and told them we would be by to pick up all our documents because we were going to sell the land and not do any more conservation easements. On May 26, we notified the partners that we were going to list the land with Fuller Western and we gave the partners a week to let us know if any of them wanted to buy it.
Just as a reminder, we had about 1000 acres and about half of that (15 parcels) had been put into conservation easements. So, about half of it was not developable, which means that we had lost any economies of scale in doing a subdivision. We could not make enough money on the first half of a subdivision (that’s where all the expenses would go), without the second half (the stuff we had put into C.E.’s) to catch up on the cost of putting in the infrastructure and finally turning a profit.
I don’t know if we were thinking straight or not, but we listed the land June 3, 2008, and notified Todd and our CPA.
Another Plot Twist
But listing the land didn’t solve any problems. I was contacted by an IRS Agent named John Boetz. He made an appointment for July 21, 2008, and showed up at our house. He sat in our living room and pulled out newspaper articles in which he had used a yellow highlighter to underline the claims of fraud and abuse. “Wait,” I said. “Do you mean to tell me that the IRS relies on false information printed in newspapers as facts on which you act?” He looked a little pained, but shrugged.
Sheeeesh. I thought the government was more sophisticated than that. I mean, if they were going to investigate us, I thought they would have real data as a basis for their investigation. Real numbers. But, nooooo – just misinformation from newspaper.
He informed me that the IRS was auditing two of our partners as it related to the conservation easements. He indicated that he was only interested in these two as a "sampling," and was focused on the valuation in the appraisals on the conservation easements. According to the agent, the IRS's method of operation was to turn these cases over to outside appraisers with whom they had contracted rather than IRS appraisers -- because the IRS appraisers were on overload, looking at so many conservation easements in Colorado.
He was most interested in Tract 10 – the same appraisal that had been under scrutiny in the O’Gorman case -- as well as Tract 4.
This felt uncomfortable, but naturally there was nothing we could do but comply. So, we supplied the documents he requested and waited. I was still sure everything would turn out okay.
Then I received a phone call from Boetz on August 4, 2008. I can remember exactly where I was in my car -- at a specific intersection -- when he told me on the phone that he was going to audit all 15 conservation easements. He claimed that the appraiser that they contracted with wanted the information from all the conservation easements we had done. I remember pulling over and moaning out loud. I think I said something incredibly naive like, “Oh, John, how can you do this to us?” A pretty stupid thing to say to an IRS Agent, I guess, but somehow I thought they were humans. I also remember the moment because it felt like the saga took a really bad turn for the worse and I suddenly knew that all our optimism had been for naught and that things were going to turn out very badly for us.
The IRS Mess
So, in order to get all the information on all the conservation easements we had done, the IRS had to send all of our partners (who were considered the “donors of the conservation easements”) a notice that they were being audited as it related to the conservation easement.
Boetz assured me that the partners would get a notice, but it was only a formality. The way we understood it, the IRS was not at all interested in the partners’ personal tax returns. They were only sending notices to partners so that it would allow us (Stan and I, as managers of the partnership) to turn over the documents that they were requesting – the appraisals, baseline reports, transfer agreements, etc.
We believed that we had all the documents the IRS needed and that partners did not have to provide anything except permission to us to provide information to the IRS on their behalf.
But, it was sickening to think of all our partners receiving all those awful notices.
We took the land off the market. While the titled was not legally “clouded,” who would buy it while we were embroiled in all this mess? So, that option went down the drain for us. ©Sharon Cairns Mann

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