U.S. Tax Court Slashes Conservation Easement Valuation, Upholds IRS Penalties on Overvaluation, Disallowed Deductions

The U.S. Tax Court, in a memorandum decision, held that the fair market value of a conservation easement donated by the taxpayer was $2,183,000, not the $180,177,000 claimed on its tax return. The court affirmed the IRS’s disallowance of most of the taxpayer’s claimed business expense deductions and imposition of penalties. The taxpayer, a limited liability company, granted a conservation easement over a 236-acre parcel of land in 2016 and claimed a $180 million charitable contribution deduction. The court determined the fair market value of the easement using the “before and after” method, finding a before value of $2.36 million ...