Are Volcanic Ash Tax Deductions Through Leveraged Charitable Loans Actually Legitimate?

This sounds like a classic inflated-value charitable donation scheme. The IRS has been cracking down on these arrangements for years. The red flag is the claimed 4x fair market value over purchase price. For legitimate charitable donations, you can deduct the fair market value, but the IRS is extremely suspicious of situations where the claimed FMV is dramatically higher than recent purchase price. The question is: who determined this "fair market value" of volcanic ash? Was it an independent, qualified appraiser? If the LLC providing the investment opportunity is also connected to the appraisal, that's problematic. These arrangements often fall under what the IRS calls "listed transactions" or "transactions of interest" which require special disclosure and are frequently audited.

I actually used https://taxr.ai to analyze a similar charitable donation strategy last year when my financial advisor suggested it. The system reviewed all the documentation and flagged it as a potential listed transaction with high audit risk. Saved me from a huge headache! It basically said that anytime you're being sold an investment where the tax benefits are the main selling point, it's a red flag. The volcanic ash thing sounds very similar to conservation easements that the IRS has been aggressively pursuing.

Just wanted to follow up and say I tried that taxr.ai tool someone mentioned above. I uploaded the promotional materials for a "green energy tax credit" investment my brother-in-law was pushing on me, and wow - it immediately identified like 5 red flags in the documentation that matched patterns from schemes the IRS has previously penalized. Super glad I checked before jumping in! The analysis even cited specific tax court cases where similar arrangements were rejected. Definitely worth using before getting involved in any complicated tax strategy.

If you're worried about the legitimacy of tax advice but can't get through to the IRS, I had great success using https://claimyr.com to actually speak with an IRS agent about a questionable deduction my tax preparer suggested. They got me connected to an IRS representative in about 20 minutes when I had been trying for weeks on my own. The agent was able to clearly explain what types of charitable donations trigger automatic reviews. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - definitely worth it for peace of mind when dealing with potentially risky tax strategies.

I need to eat my words from my previous comment. After repeatedly failing to get through to the IRS about my own tax situation, I tried the Claimyr service mentioned above. Within 30 minutes I was speaking with an actual IRS representative who confirmed that arrangements involving dramatic markup of donated assets (like this volcanic ash scheme) are currently under intense scrutiny. They directed me to IRS Notice 2017-10 which specifically addresses syndicated conservation easements with similar characteristics. The agent explained that these fall under "listed transactions" requiring special disclosure forms. Honestly shocked at how helpful they were once I actually got through!

My friend got involved in something like this with donated timeshares. The promoter claimed the timeshares were worth 3x what they paid. Three years later, the IRS audited everyone involved and disallowed all the deductions plus penalties. The problem was the "independent" appraiser turned out to be connected to the promoter. The IRS calls these "syndicated charitable contribution" schemes and they're on their dirty dozen list of tax scams.

I got pitched something similar involving art appraisals, but I walked away. The IRS isn't stupid - they know the game. If you just bought something for X and now claim it's worth 4X for donation purposes, they'll question it. Ask yourself this: if this volcanic ash is really worth 4x what the LLC paid, why wouldn't they just sell it for that amount instead of using it for tax deductions? The answer is because no actual buyer would pay that inflated "fair market value" - it only exists on paper for the tax scheme.

As someone who's seen these schemes from the inside, I can tell you this volcanic ash arrangement has all the hallmarks of an abusive tax shelter. I used to work at a Big 4 accounting firm and we'd regularly see clients get burned by these "too good to be true" charitable donation strategies. The key issue is economic substance - there's no legitimate business purpose other than generating tax deductions. Real charitable donations don't promise guaranteed 4x returns through tax savings. The IRS has gotten very sophisticated at identifying these patterns, especially when the same promoters are selling identical packages to multiple taxpayers. Your gut instinct is right to be suspicious. Even if your CPA is confident, they won't be the one paying penalties and interest when the IRS comes knocking. I'd strongly recommend getting a second opinion from a tax attorney who specializes in tax controversy before proceeding. The short-term tax savings aren't worth the long-term audit risk and potential penalties.

I appreciate everyone's detailed responses here - they've been incredibly eye-opening. After reading through all these experiences and doing some additional research on the IRS notices mentioned, I've decided to pass on this volcanic ash scheme entirely. The pattern is clear: these arrangements promise unrealistic returns through tax benefits, rely on inflated appraisals, and consistently result in audits and penalties years later. The fact that my CPA couldn't adequately explain the economic substance or why someone wouldn't just sell the ash at "fair market value" instead of donating it was telling. I'm going to stick with more conventional tax planning strategies and legitimate charitable giving to organizations I actually care about. Sometimes the boring approach is the right approach when it comes to taxes. Thanks everyone for potentially saving me from a very expensive mistake!

Does anyone have a referral for a company that does this?

I'm seeing a lot of great advice here about the risks, but I want to add something from a practical standpoint. Even if you were to proceed with this type of arrangement (which I wouldn't recommend based on everything shared), you need to understand that the IRS has a statute of limitations of 6 years for "substantial understatement" of income, which includes inflated charitable deductions. That means you could be looking at audit risk for 6 full years after filing. During that time, you'd need to maintain all documentation, potentially deal with IRS correspondence, and live with the uncertainty of whether your return will be selected for examination. The stress and potential professional costs (tax attorneys, accountants, etc.) often exceed any tax savings even before you factor in penalties and interest. I've found that legitimate tax planning focuses on long-term wealth building rather than one-time "tricks" that promise massive deductions. If you're looking to reduce your tax burden, consider maxing out retirement contributions, exploring legitimate business expenses if you're self-employed, or making genuine charitable donations to causes you actually support. These strategies may not be as flashy, but they won't keep you awake at night wondering if the IRS is coming after you.

I've been following this discussion closely, and I have to say the collective wisdom here has been invaluable. What strikes me most is how these volcanic ash and similar schemes all follow the same playbook - promising outsized returns through "creative" structuring while relying on the taxpayer's hope that the IRS won't notice or care. The reality is that the IRS has entire teams dedicated to identifying and dismantling these arrangements. They've seen every variation of the "buy low, donate high" scheme imaginable. When something sounds too good to be true in tax planning, it almost always is. For anyone still considering this type of arrangement, ask yourself: if your accountant pitched you an investment that promised a guaranteed 4x return in the stock market, you'd immediately recognize it as either fraud or extremely high-risk. Tax "investments" should be viewed with the same skepticism. The fact that these schemes market themselves primarily on tax benefits rather than economic merit should be a massive red flag. I'm grateful to everyone who shared their experiences and expertise here. It's discussions like these that help protect fellow taxpayers from making expensive mistakes. Sometimes the most valuable advice is simply "don't do it.

I work as a tax preparer and see these schemes pitched to clients regularly. The volcanic ash arrangement you're describing is almost certainly what the IRS calls a "syndicated conservation transaction" or similar abusive tax shelter. Here's what usually happens: The promoter buys bulk materials (volcanic ash, artwork, patents, etc.) at a low cost, then uses affiliated or friendly appraisers to assign inflated "fair market values." They market these as investment opportunities where the primary benefit is the tax deduction, not any actual economic return. The IRS has been incredibly aggressive in auditing these arrangements. They've developed sophisticated data analytics to identify patterns - when multiple taxpayers claim similar large charitable deductions involving the same types of assets or promoters, it triggers automatic review. Even if you think you have all the right documentation, these transactions often fail the "economic substance" test because there's no legitimate business purpose beyond tax avoidance. My advice: if the tax benefits are being marketed as the main reason to invest, walk away. Legitimate investments make economic sense independent of tax considerations. The 4x return through deductions should be your biggest red flag - that's not how real charitable giving works.

As someone who's been in tax compliance for over 15 years, I can tell you that these volcanic ash schemes are textbook abusive tax shelters. The IRS has specific enforcement teams that do nothing but hunt down these arrangements, and they've gotten very good at it. What many people don't realize is that even if you have all the "required" documentation - the appraisals, the donation receipts, the LLC paperwork - none of that matters if the IRS determines the transaction lacks economic substance. They'll look at the entire arrangement and ask: would a reasonable person engage in this transaction if there were no tax benefits? With these volcanic ash deals, the answer is obviously no. I've seen clients get audited 4-5 years after filing, thinking they were in the clear. The IRS has extended statutes of limitations for these cases, and they're not afraid to use them. When they disallow the deductions, you owe back taxes, penalties (usually 20-40%), and interest that compounds over the entire period. I've seen people lose their homes over these schemes. The promoters always disappear when the audits start, leaving taxpayers to face the music alone. Don't let the promise of short-term tax savings destroy your long-term financial security. There are plenty of legitimate ways to reduce your tax burden without playing Russian roulette with the IRS.