Fifth Circuit advises Tax Court on conservation easement valuation

BVWireIssue #95-4
August 25, 2010

Real estate easement cases before the tax court can offer some interesting guidance to BV professionals. Whitehouse Hotel Limited Partnership et al. v. Commissioner (August 12, 2010) is a good example. Lance Hall (FMV Opinions) has prepared a summary of the valuation issues from this case. Hall says “on appeal, the issues before the Fifth Circuit were:

  • whether the Maison Blanche property should be valued alone or combined with the Kress building (and related properties)
  • the highest and best use of the property, (c) the valuation approaches that should be utilized
  • whether the IRS’s expert was qualified
  • whether a deviation from Uniform Standards of Professional Appraisal Practice (USPAP) would render the IRS’s expert’s valuation report unreliable
  • whether the burden of proof should be shifted to the IRS, and
  • whether the Taxpayer had shown sufficient reasonable cause to rely on experts and, thus, avoid any gross undervaluation penalty.”
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