Accounting

Tax Strategy: IRS loses on conservation easements — for now

Published

2 years ago

April 23, 2024

After the Internal Revenue Service identified syndicated conservation easements as potentially abusive transactions and designated it as a listed transaction, the agency initially had some successful enforcement actions in court.

However, adopting an increasingly popular litigation tactic, litigants began attacking the means by which the initial IRS guidance was adopted, and specifically failure to comply with the requirements of the Administrative Procedures Act, which requires public notice of proposed action and opportunity for comment.

While it had been the position of the IRS traditionally that the APA did not apply to it, courts have begun to take a different view. The Tax Court initially supported the IRS’s position, and the 6th Circuit supported that position on appeal. However, the 11th Circuit reversed the Tax Court on the same issue and held that the IRS had failed to meet the requirements of the APA.

The IRS responded by starting to shift more guidance to the form of proposed regulations that hopefully comply with APA requirements. Those proposed regulations were issued in November 2023. The IRS also successfully had legislation enacted by Congress to limit the losses permitted to be claimed on syndicated conservation easements. The agency also has continued to attack in court the promoters and appraisers involved in these syndications, and has also continued to pursue the taxpayers claiming these losses in the courts, with the 6th Circuit on its side and the 11th Circuit opposed.

The SECURE 2.0 Act, enacted at the end of 2022 as part of an omnibus spending bill, included a provision that disallows a deduction for a qualified conservation easement contribution made by an entity taxed either as an S corporation or a partnership (including LLCs taxed as partnerships) if the amount of the contribution exceeds two and a half times the shareholder’s or member’s tax basis. The legislation also included reporting requirements for the shareholders or members seeking the deduction.

Now, however, in a Tax Court case arising from the 10th Circuit, the Tax Court has reversed its previous position and agreed that the syndicated conservation easement regulations were invalid, holding that the regulation’s basis and purpose statement failed to meet the procedural requirements of the APA. (Valley Park Ranch, LLC, 162 TC –, No. 6, Dec. 62,442.) With the Tax Court now aligned with the Eleventh Circuit view, Valley Park could spell trouble for the IRS position in all circuits.

There was a fairly strong dissent in the Valley Park Ranch decision, taking the position that there was no substantial basis for reversing the court’s opinion issued four years earlier. The dissenters were of the view that the failure to include a statement of basis and purpose was not fatal since the basis and purpose in the case were obvious.

It is not clear whether the IRS would see any merit in trying to appeal the Tax Court decision to the 10th Circuit. Now that the Tax Court has shifted its position, it seems less likely that any other circuit court would follow the 6th Circuit. It is also not clear that even the 6th Circuit would stick to its position.

Looking ahead

The situation in the long term still looks favorable for the IRS. It now has specific statutory authority to attack syndicated conservation easements that are too abusive under the statute. The agency can continue to revise its regulations to meet APA requirements. The reporting requirements will aid the IRS in identifying syndicated conservation easements offerings. The Tax Court has continued to deny deductions to shareholders and members of syndicated conservation easements involving gross overvaluations of property subject to the easement. Some of the principal promoters of the syndicated conservation easements have been convicted in federal court of conspiracy to commit wire fraud and aiding and abetting the filing of false tax returns. An appraiser for a number of syndicated conservation easement deals has also pleaded guilty to conspiring to defraud the U.S.

The Valley Park Ranch decision probably means that some early participants in syndicated conservation easements, before statutory changes to the law and before revised IRS regulations, may be able to continue to claim some of the significant past losses associated with their participation. However, with new legislative restrictions, new regulations, and criminal actions against the aiders and abetters, the IRS appears likely to curtail the worst abuses carried on by syndicated conservation easements in the future.

Accounting

Continuous Auditing Transforms Corporate ERPs

Published

4 days ago

July 21, 2026

Business Finance News

continuous auditing transforms corporate erps

As corporate accounting departments cross the threshold into late July 2026, the adoption of continuous, automated auditing systems has reached a definitive turning point. Driven by advances in artificial intelligence and deep integration with modern Enterprise Resource Planning (ERP) platforms, leading finance organizations are moving away from traditional, periodic post-hoc audits in favor of real-time, 100% transactional verification. This technological transition is redefining internal control environments, reducing compliance costs, and eliminating the structural delays inherent in legacy quarterly closing processes.

Unlike traditional auditing frameworks that rely on statistical sampling—a process that inevitably leaves operational blind spots—continuous auditing software monitors operational data feeds continuously. Every purchase order, electronic invoice, payroll disbursement, and cross-border wire transfer is automatically cross-referenced against established corporate governance parameters, regulatory tax schedules, and anti-fraud algorithms in real time. Anomalies or unauthorized ledger entries are flagged instantly, allowing internal audit teams to investigate and remediate compliance gaps immediately rather than months after the close of a financial period.

The implications for executive financial management are far-reaching. By embedding continuous verification directly into daily transaction workflows, chief financial officers gain uninterrupted visibility into the organization’s true financial standing. Real-time balance sheet auditing eliminates the severe operational bottlenecks associated with month-end and quarter-end financial reconciliations, freeing accounting professionals to focus on strategic financial modeling, tax planning, and capital allocation rather than manual data entry and spreadsheet consolidation.

However, implementing continuous auditing requires accounting leadership to invest heavily in data governance and technical upskilling. Internal audit teams must evolve from manual ledger reviewers into system architects capable of auditing complex algorithms and validating automated data pipelines. Accounting firms and corporate controllers that master continuous auditing will establish a resilient compliance framework capable of meeting stringent international regulatory standards with total transparency.

Accounting

U.S. Imposes New 50% Tariffs on Canadian Imports Under Rare Legal Provision

Published

5 days ago

July 20, 2026

Business Finance News

U.S. Imposes New 50% Tariffs on Canadian Imports Under Rare Legal Provision

WASHINGTON — In a major escalation of cross-border trade friction, U.S. President Donald Trump has signed executive orders imposing new 50% tariffs on a wide selection of Canadian exports, citing discriminatory practices by Ottawa targeting American auto, dairy, and beverage industries.

The new duties, announced Monday, will take effect in 30 days. They target a broad spectrum of consumer and industrial goods—ranging from wine, liquor, and milk products to commercial cement, furniture, clothing, and hockey equipment.

Untested Legal Mechanism

To enact the sweeping measures, the administration invoked Section 338 of the Tariff Act of 1930—a rarely used legal provision allowing the executive branch to levy additional tariffs of up to 50% on foreign nations deemed to discriminate against U.S. commerce.

White House officials noted that Section 338 addresses trade discrimination rather than national security or economic emergencies. The move comes months after prior global emergency tariffs faced legal challenges in domestic courts, signaling Washington’s pivot toward alternate statutory authorities to maintain import duties.

Senior administration officials briefed reporters that the measure directly responds to Canadian provincial bans on U.S. alcohol, restrictions on American vehicle exports, and import quota disparities affecting U.S. dairy and cheese producers relative to third-party trading partners.

“While the administration continues to secure reciprocal trade agreements globally, Canada retaliated against efforts to protect domestic industry,” U.S. Trade Representative Jamieson Greer stated.

USMCA Impact and Carve-Outs

Significantly, the newly ordered 50% duties will apply to designated items even if they otherwise comply with the United States-Mexico-Canada Agreement (USMCA).

However, the administration confirmed key targeted exemptions:

Energy products (including oil and natural gas)
Potash and critical minerals
Fish and seafood
Goods already governed by sector-specific duties (such as existing steel and aluminum tariffs)

Administration representatives emphasized that the tariffs do not stem from recent disputes concerning drifting Canadian wildfire smoke, noting that policy options regarding environmental spillover remain under separate review.

Canadian Response and Market Reaction

Following the White House announcement, the Canadian dollar experienced a sharp decline against the U.S. dollar, falling approximately 0.4% during evening trading.

Canadian Prime Minister Mark Carney issued a statement emphasizing that Canada’s earlier counter-duties had merely matched previous U.S. trade actions. “Canada stands ready to engage intensively to address outstanding issues with the U.S. to the mutual benefit of our citizens,” Carney stated, pointing to detailed proposals Ottawa submitted to modernize the USMCA framework.

Ontario Premier Doug Ford took a firmer stance, urging a “dollar-for-dollar” reciprocal response if the measures go into effect on August 19.

With a 30-day implementation window before the duties officially lock in, industry associations and trade groups on both sides of the border are calling for urgent bilateral negotiations to avert further supply chain disruption across North America.

Accounting

Automated Continuous Auditing: Transforming Compliance and Real-Time Financial Oversight

Published

5 days ago

July 20, 2026

Business Finance News

Transforming Compliance and Real-Time Financial Oversight

The traditional accounting paradigm—defined by periodic monthly closures and post-hoc annual audits—is rapidly giving way to continuous, automated financial oversight. As of July 2026, forward-thinking accounting practices and multinational corporate finance departments are leveraging continuous auditing systems powered by advanced machine learning models. These systems monitor operational transactions in real time, shifting audit methodologies from sample-based post-analysis to absolute, 100% transaction-level verification.

The operational advantages of continuous auditing are transformative. Standard auditing procedures historically relied on statistical sampling, which, despite rigorous methodology, inherently left gaps where anomalies or fraudulent transactions could go undetected for months. Modern continuous auditing platforms integrate directly with enterprise resource planning (ERP) databases, instantly cross-referencing purchase orders, invoices, bank feeds, and tax records. Any deviation from established control parameters or unusual transaction behavior triggers immediate flags for internal audit teams, dramatically reducing detection lag from quarters to seconds.

Beyond fraud prevention, continuous auditing fundamentally alters internal reporting and decision-making. Executive leadership no longer has to wait weeks after the close of a quarter to evaluate precise financial standing; real-time verified ledger data provides an uninterrupted view of operating margins, tax liabilities, and cash flow dynamics. This real-time visibility enables corporate controllers to adjust capital allocation strategies dynamically, mitigating liquidity constraints and capitalizing on emerging commercial opportunities far more efficiently than competitors bound to legacy reporting cycles.

However, implementing continuous auditing requires accounting professionals to acquire new analytical capabilities. The role of the auditor is evolving from manual data reconciliation toward system validation, algorithmic model governance, and strategic risk interpretation. Accounting firms and corporate finance departments must invest in continuous technical education, ensuring that audit staff possess the data engineering skills necessary to design, maintain, and evaluate complex automated compliance systems.