Tax insurance premiums February 18, 2021 | By Keith Martin in Washington, DC Tax insurance premiums may not be deductible. The IRS disallowed deductions claimed by two partnerships on grounds that the insurance was not closely enough related to each partnership’s business to be an “ordinary and necessary” business expense, according to internal IRS memoranda made public in December. The memoranda are CCA 202050015 and ILM 202053010. In one of the cases, a private placement memorandum was issued to raise capital from investors to buy a piece of land that the private placement memorandum said would either be developed, held for investment, or preserved by donating a conservation easement to a nature conservancy and then claiming a charitable contribution deduction. The partnership did the latter. It also bought tax insurance against which investors could make a claim if the IRS disallowed the deduction for the charitable contribution. The IRS said the tax insurance premiums were not deductible because the insurance was unrelated to the trade or business of the partnership. The other case appears to involve similar facts. The IRS has been fighting syndicated conservation easement tax shelters in court.