Tax Court Slashes $47.6 Million Deduction Claim, Backs Penalty

The partnership behind a 1,500-acre conservation easement donation owes the IRS an accuracy-related penalty for claiming a tax deduction of nearly 10 times more than the contribution’s $4.6 million fair market value, the US Tax Court said Thursday.

Buckelew Farm LLC reported a charitable contribution deduction of $47.6 million on its return for tax year 2013, calculated based on an appraiser’s determination that the land’s best use would be a hunting-oriented residential community.

However, the land’s fair market value was only about $4.59 million because the proposed development as a village community wouldn’t be a legally permissible use of the ...