Improve Your Smartphone and Computer Security
Published May 8, 2026
The Internal Revenue Service (IRS) and its Security Summit partners recognize there are heightened risks to taxpayers due to artificial intelligence (AI). Hackers now have powerful new AI tools that continue to probe your smartphone and computer software to find vulnerable areas. With the increasing use of AI by hackers, it is essential for everyone to keep their smartphones and computers updated. Many successful attacks by hackers have occurred because individuals or companies did not have updated software.
Smartphone and software companies regularly publish updates to their operating software. Because there are millions of lines of software code, it is important to continue to counter hackers by improving each software program. These regular updates to software programs substantially reduce the risk that hackers could invade and control your smartphone or computer.
There are two dominant operating systems for smartphones. These two systems offer regular updates to smartphone software. Some updates require acceptance by the user. Once notified of an update, you should promptly accept and install the update as soon as possible.
The average smartphone user has around 80 applications (apps) on their phone, many of which require regular updates. If you have an iPhone, there is both a manual and an automatic procedure for installing updates. For the manual option, select the App Store and tap your profile icon in the top right corner. You can then choose to update each individual app, or you can select “Update All”. The Update All command may take an extended period to complete the updates.
Another option is to go to Settings, then click “Apps” and select “App Store”. From this screen, you may choose to automatically install updated software on the “App Updates” tab. This will enable most apps to be regularly updated on your iPhone. Similarly, android users can check for system updates through their Settings as well as set their preference for apps to auto-update.
If an app is not updating, you also have the option of deleting the app and then downloading it again from the App Store. The newest release of the software may be easier to keep current.
Your computer runs an operating system. Many operating systems will automatically update when you turn off your computer. This makes it easy to keep your software updated. Updates can occur almost every day.
You typically will also want to update major applications, including word processing, email or spreadsheet programs. A virus protection program generally updates each time you restart your computer. Most virus programs allow you to also scan your computer’s hard disk to determine if there are any offending files.
Another level of protection is updating your passwords. Many individuals use a password program to store all their passwords. Some programs will require a new password every three to six months.
Editor’s Note: With the increased use of AI by hackers, everyone needs to be more vigilant about updating software. Some programs on the cloud are automatically updated by the software providers. However, many users need to check their settings to ensure their smartphone and computer are promptly updated.
Conservation Easement Deduction Reduced 96%
In Kimberly Road Fulton 25 LLC v. Commissioner; No. 17852-21; No. 23934-21; T.C. Memo. 2026-36, the taxpayers owned property with basis of less than $700,000, contributed a conservation easement through a syndicated partnership and claimed a conservation charitable easement deduction of $26 million. The Tax Court determined the value of the charitable deduction was approximately 4% of the claimed amount.
The taxpayers purchased approximately 25 acres in a southwestern Atlanta suburban area. The undeveloped parcel was oak-hickory-pine forest and zoned RG-3. This zoning was valuable because it allows 18 to 24 housing units per acre. The second property was roughly 130 acres in the Atlanta suburb of Union City. It was also an oak-hickory-pine forest.
The initial property was purchased by Jeffrey Grant, and ownership structures were then created by Dan Carbonara. The resulting ownership structures, Kimberly Road and South Fulton, were syndicated. Each investor expected to benefit from a targeted return of 145% of his or her investment.
The Tax Court stated, "There was one final bit of costume design for this ensemble." The development plan by Carbonara claimed a 600-unit assisted-living facility (ALF) could be built on the property. This proposed facility was sited at the top of a 50-foot cliff and would be more than twice the size of any other ALF in the State of Georgia.
The taxpayers deeded conservation easements to Southern Conservation Trust, Inc. (SCT), a qualified Section 501(c)(3) nonprofit.
The Tax Court continued, "More papering would be needed to attempt to document the deal." The taxpayers hired Thomas Spears, an appraiser with Global Evaluation and Consulting, Inc. The appraisals by Spears of the two properties totaled approximately $26 million, which represented a dramatic increase over the $700,000 cost basis.
Spears and SCT Director Kate Pace Quattlebaum signed the IRS Form 8283. The appraisals were attached to the tax return as required by Reg. 1.170A-16. The taxpayers also filed IRS Form 8886, Reportable Transaction Disclosure Statement, because this was a listed transaction. The IRS audited the partnerships and denied the deductions.
The issues at trial were whether the two partnerships were qualified, whether the appraisals met the required qualifications, whether the property satisfied the application conservation purpose requirements, the appropriate "before and after" valuations and whether penalties were applicable.
The IRS claimed that the parties did not have the required charitable purpose. However, the court noted that the gift of the easement demonstrated sufficient compliance with any required charitable purpose.
The second claim made by the IRS was that the appraisals were not qualified because Carbonara and Grant should have "realized that the appraisal values were much too high." However, the appraisals did include a thorough analysis of the property and therefore were qualified. In addition, IRS Form 8283 was substantially correct and therefore the administrative procedures were followed.
The third issue was whether there was a qualified conservation purpose. The conservation purposes could include “protection of a relatively natural habitat of fish, wildlife, or plants, or similar ecosystem." Section 170(h)(4)(A)(ii). The conservation purpose requirement is broadly interpreted and the Tax Court found, "the easements contributed to scenic enjoyment." They were also consistent with the Georgia State Wildlife Action Plan. Therefore, the easements qualified because they preserved "a relatively natural habitat of fish, wildlife, or plants, or of a similar ecosystem as well as the preservation of open space that yields a significant public benefit."
The key issue in the case was the determination of “before and after” values. The taxpayers’ appraiser, Spears, offered multiple comparables based on properties that were previously developed. IRS appraisers Raymond Krasinski and Charles Brigden located multiple comparables that were undeveloped land and generally within a few miles of the applicable property. The Tax Court agreed with the IRS that the comparables from Spears "were too far away from the subject properties’ markets and were often superior parcels in part because of their locations."
The comparables by IRS appraiser Brigden were relatively close in distance and similar in size and topography. Therefore, the Tax Court determined that the IRS comparables were appropriate. A major defect of the Spears appraisal was the claim that the property could be used for an ALF or mixed-use development. Because the Spears assumption was not based on reliable market data, the Tax Court accepted the Brigden valuations and reduced the charitable deduction from approximately $26 million to $1.04 million. With this gross valuation misstatement, Section 6662(h) applied and there was a 40% penalty.
Editor's Note: In this case and other conservation easement valuation cases, the Tax Court focuses on the quality of the comparables. When the Tax Court reduces the charitable deduction by 96%, the taxpayers’ comparables are clearly unreasonable.
IRS Promises Fourth Conservation Easement Settlement Option
On May 6, 2026, the Internal Revenue Service (IRS) published IR-2026-63 and announced it was updating the conservation easement website and plans to issue a fourth settlement option.
IRS Chief Executive Officer Frank J. Bisignano stated, "The updated information on IRS.gov explains why the IRS continues to challenge these transactions and highlights the serious risks taxpayers face when they are sold inflated tax benefits disguised as conservation."
The IRS notes a conservation easement can provide an important public benefit. However, the syndicated conservation easement cases in Tax Court are often the result of aggressive promoters. To try to reduce the backlog for the Tax Court, the IRS will soon release a fourth "time-limited settlement opportunity for eligible taxpayers."
Treasury Assistant Secretary for Tax Policy Kenneth Kies commented on the new plan. He indicated this fourth settlement option would be the final offer. He noted, "The courts have repeatedly rejected abusive conservation easement arrangements, often sustaining major reductions in claimed deductions and significant penalties."
Commentators hope this fourth settlement offer will be more favorable to the taxpayers. A new settlement offer needs to have reasonable terms that will be attractive to taxpayers and permit the collection of taxes, interest and penalties from the partners rather than from the partnership.
The first settlement was offered in June 2020. It was unpopular because the charitable deduction was totally disallowed, there was an increased penalty if all partners did not join in and the partnership (rather than the partners) had to pay the taxes.
A second offer in early 2024 applied only to docketed cases. It did allow a charitable deduction equal to basis and reduced the penalty from 40% to 10%.
The third settlement offer, initiated in June 2024, targeted non-docketed cases. That offer allowed a deduction for out-of-pocket costs, reduced tax saving from 37% to 21% and imposed a 5% penalty.
Editor's Note: The IRS has overwhelmingly won on valuation issues. However, there are many cases that still have not reached a conclusion. The challenge of a settlement is there are major losses in revenue. However, with payment of taxes, interest, penalties and litigation costs, proceeding to trial will cause many taxpayers to lose their entire investment.
Applicable Federal Rate of 5.0% for May: Rev. Rul. 2026-9; 2026-19 IRB 1 (16 April 2026)
The IRS has announced the Applicable Federal Rate (AFR) for May of 2026. The AFR under Sec. 7520 for the month of May is 5.0%. The rates for April of 4.6% or March of 4.8% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2026, pooled income funds in existence less than three tax years must use a 4.0% deemed rate of return. Charitable gift receipts should state, “No goods or services were provided in exchange for this gift and the nonprofit has exclusive legal control over the gift property.”
