U.S. Appeals Court Upholds Tax Court’s Ruling on Conservation Easement Deductions, Affirms Penalties for Overvaluation

The U.S. Court of Appeals for the Eleventh Circuit affirmed the Tax Court’s decision sustaining gross-valuation-misstatement penalties on two LLCs that claimed conservation easement deductions. Taxpayers, two LLCs, claimed charitable contribution deductions of approximately $23.1 million and $13.8 million for conservation easements donated on properties in 2016. The IRS disallowed the deductions and assessed penalties for overstating the value of the properties. The Tax Court sided with the IRS, determining much lower fair market values for the easements based on the IRS’s expert evidence. The appellate court found no error in the Tax Court’s valuation and determination of penalties. The ...