Tenth Circuit affirms Tax Court’s valuation of conservation easement

August 17: The U.S. Court of Appeals for the Tenth Circuit affirmed a decision of the Tax Court determining a value of $560,000 for a conservation easement on the taxpayer’s property, and rejecting the taxpayer’s claim that the easement’s value was closer to the original $2.2 million claimed as a charitable deduction. Trout Ranch LLC v. Commissioner, No. 11-9006 (PDF 52 KB) (10th Cir. August 16, 2012)

Summary

The taxpayer purchased 450 acres in Colorado, with the intention of developing home sites on a small segment while preserving the remaining 85% by means of a conservation easement. The taxpayer claimed a charitable deduction for the easement valued at $2.2 million. The IRS determined that the easement did not reduce the value of the property, appraised the charitable contribution at zero, and disallowed the deduction.

The taxpayer sought review by the Tax Court, which in a 2010 decision (PDF) concluded that the proper value of the easement was $560,000. On appeal, the Tenth Circuit affirmed.

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