One of my clients invested in a syndicated conservation easement a few years back. I did not prepare this return and it predates when the client onboarded.
My client recently received notice from the syndication that the IRS has been auditing the tax year related to the conservation easement deduction, and has issued a Notice of Proposed Partnership Adjustment ("NOPPA") in which the conservation easement deduction is denied and various P&I are assessed. The syndication has indicated they intend to file a petition in tax court and fight for the deduction. The syndication has notified partners that it intends to make a push-out election as well.
The syndication is asking partners to submit a Modification Request if necessary. It's my understanding that this is not necessary given the fact pattern. A push-out election makes this moot. Correct?
Assuming the syndication loses in tax court, we'd prepare a pro-forma return of the audited tax year without the conservation easement charitable deduction, and report any additional tax, P&I in on the tax return of the calendar year in which the Final Partnership Adjustment was submitted by the IRS. Correct?