Appeals court upholds $9 million in penalties for overstated historic easement deduction
Corning Place Ohio, LLC v. Commissioner, No. 25-1093, 2025 BL 396463 (6th Cir. Nov. 05, 2025), Court Opinion
The Sixth Circuit affirmed the Tax Court’s disallowance of Corning Place’s conservation easement deduction and sustained penalties, holding the deduction belonged to a different taxpayer year, the $22.6 million valuation was speculative, the claimed expenses were unsubstantiated, and the penalty defenses failed.
Holding
The court affirmed that Corning Place could not claim the easement deduction on its 2016 partnership return because the donation occurred during a period when the entity had a single owner and was not a taxable partnership.
The Tax Court did not clearly err in valuing the easement at $900,000, rejecting a 45-story hypothetical redevelopment as physically, legally, and economically remote.
The court also upheld denial of $665,000 in expense deductions for lack of proof of accrual or payment and sustained negligence and gross valuation misstatement penalties.
Why It Matters
Confirms that partnership deductions cannot be taken for periods when the entity has only one partner …
