Taxpayer Is Denied Charitable Deduction for a Conservation Easement, and Gross Valuation Misstatement Penalties Are Applied

BVLaw
Court Case Digests
December 19, 2022
6552 Land Subdividers and Developers, Except Cemeteries
531390 Other Activities Related to Real Estate
federal taxation
charitable contribution, fair market value (FMV), tax deduction, deduction, accuracy penalty

Brooks v. Comm’r
T.C. Memo 2022-122; 2022 Tax Ct. Memo LEXIS 122
US
Federal Court
Federal
United States Tax Court
Miller; Petkovitch
Wells

Summary

The IRS disallowed carryover charitable deductions for donation of a conservation easement by taxpayers’ family LLC to the county where the property lies. In addition to the disallowance of the donation deductions, the IRS assessed gross overvaluation penalties. The Tax Court denied the deductions in part for lack of following regulations and procedures. Additionally, the court found that the value determined by the taxpayers’ appraiser was filled with errors and had basic incorrect assumptions resulting in a gross misstatement of value. Thus, taxpayers were liable for the 40% accuracy-related penalty resulting from a gross valuation misstatement pursuant to section 6662(h) as determined for each of the years in issue.

See Also

Brooks v. Comm’r

The IRS disallowed carryover charitable deductions for donation of a conservation easement by taxpayers’ family LLC to the county where the property lies. In addition to the disallowance of the donation deductions, the IRS assessed gross overvaluation penalties. The Tax Court denied the deductions in part for lack of following regulations and procedures. Additionally, the court found that the value determined by the taxpayers’ appraiser was filled with errors and had basic incorrect assumptions resulting in a gross misstatement of value. Thus, taxpayers were liable for the 40% accuracy-related penalty resulting from a gross valuation misstatement pursuant to section 6662(h) as determined for each of the years in issue.

This article also appears in:
Business Valuation UpdateVol. 29 No. 3