Court Affirms Penalties of ‘Frivolous’ Conservation Easement Bid

Penalties for gross understatement of tax are appropriate for a partnership whose claimed conservation easement tax deduction was disallowed, the US Tax Court said.

Judge Ronald L. Buch said Veribest Vesta LLC was properly assessed the 40% “gross valuation misstatement” penalties under IRC Section 6662(a). Veribest Vesta claimed a $20.3 million easement on 55 acres of Georgia land for 2018, after determining it could be used as a granite quarry. But the IRS disallowed the deduction and determined after concessions the value of the donation to be $111,000, with Buch calling the larger figure “patently frivolous.”

• Evidence presented during ...