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IRS Wins Tax Court Backing on Conservation Easement Regulations

May 12, 2020, 11:14 PM

Federal regulations governing tax deductions for donating the rights to develop property—known as a conservation easement—meet required procedures and are a reasonable interpretation of Congress’s legislation, the U.S. Tax Court has ruled.

The court’s decision Tuesday resolved a much-watched case involving Oakbrook Land Holdings, LLC, which claimed a tax deduction of more than $9.5 million after donating the rights to develop land in Tennessee to the Southeast Regional Land Conservancy. The IRS disallowed the deduction, arguing in part that it violated regulations interpreting a requirement in tax code Section 170(h)(5) that the conservation purpose of such easements must be ...