Tax Court cuts $10.5 million easement claim to $379,000
Mize Farm, LLC v. Commissioner, Docket No. 8979-23 (T.C. bench opinion, Nov. 20, 2025)
The Tax Court held that Mize Farm’s conservation easement was worth $379,000, not the $10.5 million reported, and imposed a 40% gross valuation misstatement penalty.
Holding
The court found the fair market value of Mize Farm's 2017 conservation easement was $379,000 using a before-and-after valuation, allowed a deduction of that amount, disallowed the remaining $10.5 million, and upheld the 40% penalty for gross valuation misstatement under §6662(h) without reasonable cause defense.
Why It Matters
The court again rejected extreme per-acre valuations in a syndicated easement setting where local market data did not support the claimed numbers.
IRS expert valuations that are already generous relative to local data can be treated as concessions that cap the “before” value.
Bench opinions continue to apply recent Tax Court and appellate easement precedents on highest and best use and comparable sales selection.
Once the misstatement crosses the “gross” threshold in a charitable contribution case,…
