Conservation Easement Tax Court Rulings 2026: 16 Partnerships, $612.9M Claimed, $7.1M Allowed

What we counted, and what we left out

We searched the Tax Court’s public opinion database for the words “conservation easement” among memorandum, T.C., summary and other opinions filed from January 1 to November 9, 2026. The search returned 27 docket entries in 19 distinct opinions, and a search by case name found a twentieth, 167 T.C. No. 14 (November 2, 2026). We downloaded and read all 20. Nineteen concern easements. One, T.C. Memo. 2026-49 (June 10, 2026), is an individual taxpayers’ case about a written acknowledgment for a donation of a school campus; the word appears only in cited precedent, so we excluded it. Where one opinion covers several dockets (T.C. Memo. 2026-23 covers four; 2026-36, 45, 106, 107 and 115 cover two each) we list each partnership once.

Individual investors who are co-petitioners or who agreed to be bound by a partnership’s case are not named here. In T.C. Memo. 2026-45, for example, a married couple stipulated to be bound by the Rising Rock Partners, LLC result on value, and the court applied the same gross valuation penalty to their share. In T.C. Memo. 2026-23, Tigner Property, LLC and 970 Turner Property, LLC agreed to be bound by the Harman Road Property, LLC test case; the opinion states no separate amounts for them.

The 17 partnerships with a ruling on value, deduction or penalty

“Claimed” is the deduction the partnership reported for the easement, as the opinion states it. “Allowed” is the deduction the court held allowable; where the court allowed nothing, it is shown as $0 with the value the court found in the alternative.

Source: U.S. Tax Court opinions, docket numbers and judges in the CSV. Morgan Run’s claim is stated in the opinion as $26 million. Kimberly Road Fulton 25 and South Fulton Parkway 58 are both in T.C. Memo. 2026-36.

Our arithmetic

Add the claimed and the allowed columns for every row except Malibu Valley Land, LLC (whose allowed figure is the court’s own estimate, not a final number) and the totals are $612,852,000 claimed and $7,063,579 allowed, which is 1.15 percent. If you count the alternative values in the four zero-deduction cases instead of $0, the court-found values total $11,094,866, or 1.81 percent of the claims. Add Malibu at the court’s estimate and the 17 partnerships claimed $644,927,000 against about $26.8 million allowed, roughly 4.1 percent (our arithmetic, approximate). The penalty column reflects what each opinion says; it is the court’s holding, not our reading.

In the 16 partnership cases where both amounts are stated, the court allowed $7,063,579 of $612,852,000 claimed (our arithmetic).

The three kinds of loss

1. Valuation: the highest and best use did not survive

Twelve of the 16 turned on what the land was worth before the easement. The pattern in the opinions is the same each time. The appraisal assumed a use far above what the land had been bought for: a clay borrow pit (North Donald LA Property, LLC), a sand and gravel business (Hancock County Land Acquisitions, LLC), mixed-use development in a rural county with a total population of roughly 22,000 (Watson Lake Investments, LLC and Meadow Lake Investments, LLC), granite mining (Lontrac Enterprises, LLC) and a 780,000-square-foot distribution facility (Morgan Run Partners, LLC). The court asked whether that use was legally permissible, physically possible and financially feasible, found that it was not, and valued the land by comparable sales.

On the pricing evidence, T.C. Memo. 2026-28 is the most direct: “The investors were not purchasing land; in substance, they were purchasing tax deductions.” The court rejected the offering price as evidence of the land’s value because the investor price tracked the promised deduction, not the land.

2. Statutory requirements: perpetuity and the qualified appraisal

T.C. Memo. 2026-107 held that the facade easements on the Del Monte and Empire buildings in Columbus were not protected in perpetuity, so no deduction is allowed. It also found the easements’ actual values, $200,000 and $550,000, against $18,742,000 and $20,658,000 claimed. T.C. Memo. 2026-115 held that neither Murphy Hollow, LLC nor Hales Gap, LLC obtained a qualified appraisal, so the deductions were denied in full; in the alternative the court found values of $2,075,025 and $1,206,262, against $26,725,000 and $19,420,000 claimed.

3. The one that went the other way

In T.C. Memo. 2026-68, Greaves, J., found that Malibu Valley Land, LLC had donative intent, accepted that the property had development potential through an old vesting tentative tract map, and set the “after” value at $2 million. The court wrote that, by its estimate, “the easement is worth approximately $19.7 million,” with the precise figure to be computed under Rule 155. It then held that the partnership made a good-faith investigation of value and had reasonable cause, so no gross valuation penalty applies. The opinion is an appraisal-by-appraisal fact finding, not a rule that protects other deals.

The seven procedural opinions

These do not tell you what an easement is worth. They tell you which procedural arguments failed or worked in 2026.

Source: U.S. Tax Court opinions. “Not stated” means the opinion gives no dollar amount.

Two points matter to a partner. Under the audit regime that replaced TEFRA (the Bipartisan Budget Act of 2015), the partnership, through its partnership representative, litigates and the partners are bound. In 166 T.C. No. 6 the reviewed court held that the partnership could not raise its members’ due process claim. In 167 T.C. No. 11 the court held the petition deadline in section 6234(a) is not jurisdictional and can be equitably tolled, and applied that to Kings Road Property, LLC after the IRS mailed the final notice earlier than the partnership’s counsel calculated. In 167 T.C. No. 14 it refused to reconsider that holding.

Where the rules stand

Treasury’s final regulations, T.D. 10007, name Notice 2017-10 (2017-4 I.R.B. 544) as their basis and state: “These regulations are effective on October 8, 2024.” Section 170(h)(7) provides that a partnership’s contribution is not a qualified conservation contribution if it “exceeds 2.5 times the sum of each partner’s relevant basis in such partnership.” The tests, the exceptions and the penalties for failing to report are in our guide to syndicated conservation easements as listed transactions. T.C. Memo. 2026-36 notes that the Green Valley decision (159 T.C. 80) prohibits the court from upholding the section 6662A reportable-transaction penalty on that notice, which is why the penalties above are the valuation-based ones.

How a deduction reaches you matters too: it arrives on a Schedule K-1 (see our K-1 guide for real estate funds). The cost of a loss is not only the disallowed deduction: the 40 percent penalty applies to the portion of the underpayment attributable to the overstated value, and the opinions note that section 6664(c)(3) removes the reasonable cause defense for a gross misstatement.

What a reader can do with this

If you hold units in a conservation easement partnership, or you are being pitched one, these are the questions the 2026 opinions turn on. This is analysis of public documents, not investment, legal or tax advice.

• Check the use behind the value. Ask what use the appraisal assumes and whether the zoning, access and the market allow it today. The opinions that failed all assumed a use the land did not have on the valuation date.
• Compare the land’s purchase price with the claimed value. The courts repeatedly used the price the partnership or its seller actually paid, close to the donation date, as the check. Hancock County Land Acquisitions, LLC claimed $180,177,000 on a 236-acre parcel that was part of a 1,698-acre tract that had changed hands three times during the previous 13 years at prices as low as $895 and $2,356 per acre.
• Ask who bore the appraisal risk. A qualified appraisal is a condition of the deduction, and in T.C. Memo. 2026-115 its absence cost two partnerships the whole deduction.
• For a historic building, ask how the easement survives a casualty or sale. The perpetuity ground in T.C. Memo. 2026-107 was about what happens to the easement’s protection and proceeds.
• Read your notice of partnership adjustment dates. The petition deadline in section 6234(a) was disputed in two opinions; do not assume you have more time than the notice says.
• Look at the penalty range, not just the deduction. A 40 percent penalty on the underpayment from an overstated value, plus interest, is the realistic downside in 16 of 17 decided cases.

FAQ

Sources, read and saved on November 9, 2026: U.S. Tax Court opinions T.C. Memo. 2026-11 (Docket No. 645-22), 2026-14 (11538-24), 2026-19 (24703-21), 2026-23 (12304-20, 12517-20, 13271-20, 13663-20), 166 T.C. No. 4 (5401-24), 166 T.C. No. 6 (577-24), T.C. Memo. 2026-28 (12385-20), 2026-36 (17852-21, 23934-21), 2026-45 (23614-21, 33677-21), 167 T.C. No. 4 (637-23), T.C. Memo. 2026-68 (20442-19), 167 T.C. No. 11 and No. 14 (10272-25), T.C. Memo. 2026-90 (12214-20), 2026-106 (13696-20, 24239-22), 2026-107 (3411-21, 6084-21), 2026-108 (272-18), 2026-112 (8669-20) and 2026-115 (9620-21, 13346-21), all from the Tax Court’s public docket search; and Treasury Decision 10007, Federal Register document 2024-22963, October 8, 2024. Sums, percentages and the Malibu total are our arithmetic. Opinions state the issues as the court found them; where we say a partnership claimed an amount, it is the amount in the opinion. This is analysis of public documents, not investment, legal or tax advice.