Tax Court in Brief | Thompson v. Commissioner | Conservation Easements: Donor Improvement Carve-Outs and Supervisory Approval for Valuation Penalties

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The Tax Court in Brief – July 18th – July 22nd, 2022

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Tax Litigation:  The Week of July 18th, 2022, through July 22nd, 2022

Thompson v. Commissioner, T.C. Memo. 2022-80 | July 20, 2022 |Lauber | Dkt. 8792-20.

Short Summary:

Petitioner made a conservation easement donation and claimed charitable contribution deductions. The IRS disallowed the deductions and asserted accuracy-related penalties (I.R.C. § 6662(a)). The Petitioner timely field for redetermination. In its Answer, the Commissioner asserted additional penalties for valuation misstatements (I.R.C. § 6662(e), (h)) and later filed for summary judgment.

Key Issues:

The court evaluated whether there was a genuine of material fact that:

Protection in Perpetuity.

The Commissioner argued that the deed of easement improperly carved-out proceeds for “donor improvements” from a hypothetical sale of the property in the event the easement is extinguished.


Petitioner argued that the Commissioner failed to authenticate penalty approval forms and a sworn declaration. Therefore, he asserted the IRS would have to prove prior written approval at trial and that its personnel should be subject to cross-examination. Additionally, the Petitioner contended that prior written approval of the valuation penalties was ineffective because the relevant personnel lacked “real estate expertise” and failed to consult with a property valuation expert.

Primary Holdings:

Key Points of Law