Fee Simple “Investment” - Tax Play

My CPA (aggressive) reaches out to me last week. The company is pitching a fee simple tax investment strategy. I had never heard of it. Have to have a certain income to even qualify for the lowest investment. Here’s the low down:

(Taken from a forum but is the same thing he pitched)

- an LLC is created that purchases a piece of land at price X
- they then have gotten the land appraised with a much higher appraisal value than what they paid for it. My understanding is this could be for a number of reasons (such as claiming there is a very profitable mineral on the land that could be mined, etc)
- then the investment is offered to individual investors
- Then basically the piece of land gets donated to charity at the higher appraisal value. Technically, each individual investor votes on whether they want to donate it or not and the majority wins out. But given that the entire point of investing in these things is to reduce taxes, 99% of the time the vote is to donate the land.
- each individual investor then gets to deduct the donation from there income using the higher appraisal value. For instance, the one I have been approached with I would get to invest 25k and then deduct $125k from my income. Basically giving me around a 45k tax deduction

Basically, I have just given 25k to get a 45k reduction in taxes and I net 20k.

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TLDR: invest $25k. Deduct $125k from taxes under the charity item. Nets $45k from your tax return
CPA fee is also $6k to set the deal up

Obviously, audit is the risk but he said they’ve been doing this for 10years w numerous clients and have never been audited. This is not a conservation easement play which is a big red flag w the IRS. I’m pondering it.