Brooks v. Commissioner – “Gross” overvaluation of easement donation leads to 40% tax penalty

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Abstract: It’s generally not a good sign when the U.S. Tax Court describes your expert’s value conclusion as “incredible as a practical matter.” Recently, taxpayers who claimed charitable contribution deductions for donating a conservation easement learned that lesson the hard way. Not only did the court reject the value provided by the taxpayers’ expert, but it also assessed a 40% penalty for a “gross valuation misstatement.” This article summarizes this recent case. Brooks v. Commissioner, T.C. Memo. 2022-122, Dec. 19, 2022.