Savannah Shoals, LLC v. Commissioner of Internal Revenue
CourtCourt of Appeals for the Eleventh Circuit
Date FiledJuly 16, 2026
Docket24-12661
StatusPublished
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Full Opinion
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FOR PUBLICATION
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 24-12661
____________________
SAVANNAH SHOALS, LLC,
GREEN CREEK RESOURCES, LLC,
TAX MATTERS PARTNER,
Petitioners-Appellants,
versus
COMMISSIONER OF INTERNAL REVENUE,
Respondent-Appellee.
____________________
Petition for Review of a Decision of the
U.S. Tax Court
Agency No. 3412-22
____________________
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2 Opinion of the Court 24-12661
Before BRANCH, LUCK, Circuit Judges, and MORENO,∗ District
Judge.
BRANCH, Circuit Judge:
Savannah Shoals, LLC (“Savannah Shoals”) granted a
conservation easement over a 103-acre tract of land, claiming a $23
million tax deduction for the contribution. The Internal Revenue
Service (“IRS”) rejected the deduction and imposed penalties
because it believed that Savannah Shoals had significantly
overstated the easement’s value. The tax court agreed with the
IRS, determining that the “highest and best use” Savannah Shoals
claimed for the tract of land—an aggregate quarry—was not viable,
so the land was worth only $480,000, a far cry from Savannah
Shoals’s multi-million-dollar deduction.
Savannah Shoals raises a number of challenges to the tax
court’s decision, primarily arguing that the district court was
required to undertake a four-factor test when it analyzed the
property’s highest and best use. But neither the relevant statutory
and regulatory provisions nor our caselaw requires the use of such
a test. The district court properly concluded that it was unlikely
Savannah Shoals’s property would be used as an aggregate quarry
because the market would not support such a use. Because
Savannah Shoals’s other challenges likewise fail, we affirm the tax
court’s judgment.
∗ Honorable Federico Moreno, United States District Judge for the Southern
District of Florida, sitting by designation.
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I. Background
In 2007, a developer purchased around 430 acres of land in
Hart County, Georgia. During the following years, the developer
sold a few lots and took steps toward developing the property, but
eventually set the project aside. In 2017, the developer entered an
agreement to sell its interest in 103 acres (the “Property”) to an
investment company who planned, in turn, to donate a
conservation easement over that land. Later that year, engineering
contractors obtained samples of subsurface materials on the
Property and tested those materials. They determined that the
materials qualified to be used as crushed rock aggregate. An expert
prepared a report on the profitability of an aggregate quarry on the
Property. He concluded that, based on a discounted cashflow
(“DCF”) analysis, the net present value of mineable aggregate on
the Property was $23.1 million.
In October 2017, Savannah Shoals was formed, and the
developer agreed to contribute the Property to Savannah Shoals—
as Savannah Shoals’s only asset—in exchange for a 95%
membership interest. The developer then agreed to sell 92% of its
membership interest in Savannah Shoals for $515,000 to a separate
partnership, Savannah Shoals Investments, LLC. By December 28,
2017, these transactions were completed. That same day,
Savannah Shoals Investments granted a conservation easement
over the Property to Southeast Regional Land Conservancy, Inc.
On its 2017 tax return, Savannah Shoals claimed a $23 million
deduction for the donation of the easement.
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On December 21, 2021, the IRS issued Savannah Shoals a
Final Partnership Administrative Adjustment, which stated that
Savannah Shoals had failed to establish that its contribution
qualified for the deduction and, even if the contribution qualified,
that Savannah Shoals had failed to establish the value of the
contribution. The IRS thus determined that a 40% penalty for
gross valuation misstatement was warranted. On March 1, 2022,
Savannah Shoals filed a petition in the U.S. Tax Court challenging
these determinations. After discovery, the tax court held a four-
day trial during which it heard testimony from 13 witnesses. The
court subsequently issued a memorandum opinion finding that
Savannah Shoals qualified for the deduction but had significantly
overstated the value of the easement, triggering the 40% penalty.
In its opinion, as relevant to this appeal, the court began its
valuation analysis by assessing the Property’s highest and best use.
Savannah Shoals argued that the Property’s highest and best use
was as an aggregate quarry, while the Commissioner argued it was
low-density residential and recreational uses. The court assessed
reports and testimony from Savannah Shoals’s experts Richard
Capps, Douglas Kenny, and Greg Gold and Commissioner expert
Kevin Gunesch regarding the financial feasibility of establishing
and operating a quarry on the Property.
First, the court noted that the parties’ experts agreed “the
market for aggregate is limited to an area within a 50-mile radius
of a quarry” because transportation costs for aggregate are high.
The court noted that “the area surrounding the easement property
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[was] primarily rural,” with a “small population” and “minimal
growth during the relevant period.” The larger metro areas that
Savannah Shoals’s experts pointed to—Greenville, Augusta, and
Atlanta—were much further away, making it less likely a quarry in
Hart County would be successful at reaching those markets. The
tax court discounted Gold’s testimony regarding the per capita
demand for aggregate because Gold “based his demand
calculations on statewide aggregate demand” in South Carolina
and Georgia without accounting for differing demands in rural
areas and population centers. The court likewise noted that Gold’s
calculated “statewide demand figures . . . [were] significantly
higher than nationwide demand.”
Next, the tax court considered competition from existing
quarries, especially those closer in proximity to large population
centers. The court noted that none of Savannah Shoals’s experts
“took into account competition from other quarries.” Only the
Commissioner’s expert Gunesch “adequately examined the effect
that competing quarries would have had on the size of the
proposed quarry’s market.” He had identified at least seven
quarries close to the nearest population center, the Greenville
metro area. Athens, another population center around 50 miles
from Hart County, also had “multiple suppliers that are closer than
the easement property.” Each of these closer quarries would have
significant “delivered price advantage[s]” over a quarry on the
Property.
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The court finally credited Gunesch’s testimony that “a
quarry operating in line with Mr. Gold’s DCF analysis would have
an operating profit margin of 67%” while the “average industry
profit margin is 24%,” yet another indication that Savannah
Shoals’s “experts’ production figures are unreasonable.” Based on
all of this evidence, the court concluded that “petitioner’s experts
overestimated annual sales of aggregate from the proposed quarry
and overstated its potential profitability.” The court thus adopted
the Commissioner’s proposed highest and best use—low density
residential and recreational use—based on expert evidence from
Commissioner expert Charles Brigden.
The court then assessed the Property’s value before and
after the easement’s donation based on a residential and
recreational best use in order to calculate the fair market value of
the easement. It reviewed Brigden’s comparable sales analysis,
which resulted in values between $3,198 and $4,626 per acre for a
proposed “before” price of $420,000. It noted that Brigden had
performed a second comparable sales analysis based on other
properties sold for mining uses. From that analysis, Brigden
offered average and median adjusted prices of $8,532 and $7,392
per acre, respectively. While the court did not adopt these values,
because it had concluded that a quarry was not the Property’s
highest and best use, it offered this evidence as “confirm[ation] that
[Savannah Shoals] claimed an exorbitantly high, baseless value for
the unencumbered easement property.” Ultimately, the court
relied most heavily on the actual sale of the interest in the Property
completed the same day the easement was donated. The court
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determined that the $515,000 paid for a 92% interest was reflective
of the Property’s fair market value at the time. Based on this
evidence, the court found that the Property’s value before the
easement was $580,000. It adopted Brigden’s proposed value of the
Property after the easement’s donation—$100,000—as more
favorable to Savannah Shoals’s value calculation than Savannah
Shoals own proposed “after” value of $290,000. The court
therefore found that the easement’s fair market value on the
donation date was $480,000. Because Savannah Shoals had claimed
a $23 million deduction—significantly more than 200% of the
easement’s actual value—the court imposed a 40% gross valuation
misstatement penalty.
Savannah Shoals timely appealed the tax court’s decision.
II. Standard of Review
“We review the tax court’s legal conclusions de novo and its
findings of fact for clear error.” Palmer Ranch Holdings Ltd. v.
Comm’r, 812 F.3d 982, 993 (11th Cir. 2016). “A determination of fair
market value is a mixed question of fact and law: the factual
premises are subject to a clearly erroneous standard while the legal
conclusions are subject to de novo review.” Id. at 994 (quotation
omitted).
III. Discussion
This case arises in the context of 26 U.S.C. § 170, which
“allows tax deductions for charitable contributions and gifts of
interests in real property.” Pine Mountain Pres., LLLP v. Comm’r, 978
F.3d 1200, 1203 (11th Cir. 2020). Among various qualifying
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contributions, a taxpayer may claim a deduction for a “qualified
conservation contribution”: traditionally, a conservation
easement. See id. (quoting 26 U.S.C. § 170(h)(1)). “To qualify as a
‘qualified conservation contribution,’ a grant must be ‘(A) of a
qualified real property interest,’ ‘(B) to a qualified organization,’
and ‘(C) exclusively for conservation purposes.’” Id. (quoting 26
U.S.C. § 170(h)(1)).
In addition to meeting these requirements, a taxpayer
claiming a deduction must prove the amount of the deduction: that
is, the value of the easement contribution. See Palmer Ranch, 812
F.3d at 1002. “The value of . . . a charitable contribution of a
perpetual conservation restriction”—i.e., a conservation
easement—“is the fair market value of the perpetual conservation
restriction at the time of the contribution.” 26 C.F.R. § 1.170A-
14(h)(3)(i). The Treasury Regulations offer two alternative
methods of valuing a conservation easement. First, if evidence of
comparable easement sales is available, “the fair market value of
the donated easement is based on the sales prices of such
comparable easements.” Id. But when such evidence is not
available, the “before-and-after” method is used. TOT Prop.
Holdings, LLC v. Comm’r, 1 F.4th 1354, 1369 (11th Cir. 2021).
“The before-and-after method calculates the fair market
value as the difference between the fair market value of the
property pre- and post-encumbrance.” Id. (quotation omitted); see
26 C.F.R. § 1.170A-14(h)(3)(i). For purposes of the before-and-after
method, the fair market value of property is based on the land’s
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“highest and best use.” TOT Prop., 1 F.4th at 1369; see 26 C.F.R.
§ 1.170A-14(h)(3)(ii). Parties first determine the property’s highest
and best use, then “calculate a dollar value based on that use.” TOT
Prop., 1 F.4th at 1370.
The tax court concluded that Savannah Shoals was entitled
to an easement deduction, and the Commissioner does not
challenge that conclusion here. Nor does Savannah Shoals directly
challenge the tax court’s ultimate valuation of the easement.
Instead, it argues that the court made several errors in its
assessment of the Property’s highest and best use before the
easement was granted (which it presumably believes skewed the
resulting valuation). Specifically, it argues that (1) the court
improperly admitted and relied on expert testimony and hearsay
evidence regarding the Property’s possible use as a quarry; (2) the
court applied the wrong legal test for highest and best use; and
(3) the court erred in its factfinding and failed to make written
findings of fact and conclusions of law regarding the Property’s
highest and best use. After considering each issue, we affirm the
tax court’s decision.
A. The tax court did not abuse its discretion by admitting or
relying on the Commissioner’s expert’s report and testimony
Savannah Shoals begins by challenging the tax court’s
decision to admit and rely upon certain evidence the
Commissioner offered through its expert Charles Brigden. First,
Savannah Shoals contests the admissibility of Brigden’s testimony,
maintaining that Brigden, a real estate appraiser, lacked the
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expertise to opine on “mining issues,” so the court erred when it
relied on him for “mining conclusions.” Second, Savannah Shoals
argues that the tax court erred by relying on certain geological
maps as substantive evidence and by allowing Brigden to rely on
them for his opinions. Savannah Shoals further contends that both
Brigden and the tax court misread those maps, leading them to
draw incorrect conclusions regarding the availability of aggregate
for mining throughout the region surrounding the Property. Each
of Savannah Shoals’s evidentiary challenges fails.
We review the tax court’s evidentiary decisions, including
its decision to admit expert testimony, for abuse of discretion. See
Curtis Inv. Co., LLC v. Comm’r, 909 F.3d 1339, 1349 (11th Cir. 2018).
“This Court will not reverse an evidentiary decision of a [trial]
court unless the ruling is manifestly erroneous.” In re Teltronics,
Inc., 904 F.3d 1303, 1310 (11th Cir. 2018) (quotations omitted).
1. The tax court did not abuse its discretion when it
admitted the Commissioner’s expert’s report and
allowed him to testify
Savannah Shoals claims the tax court erred when it allowed
the Commissioner’s expert Brigden to testify about mining issues
because he was not qualified to do so under Federal Rule of
Evidence 702. It asserts that he lacked “the knowledge, skill,
experience, training, or education to opine on mining issues,” and
thus his conclusions regarding “mining issues” should not have
been admitted, and the court should not have relied on them.
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The Commissioner responds that Brigden appropriately
testified regarding his area of expertise: the real estate market.
Brigden’s testimony on that subject, he argues, was both admissible
and reliable.
“Federal Rule of Evidence 702 governs admission of expert
testimony in Tax Court.” Curtis Inv. Co., 909 F.3d at 1349. When
screening expert evidence for admissibility, the court should
consider whether
(1) the expert is qualified to testify competently
regarding the matters he intends to address; (2) the
methodology by which the expert reaches his
conclusions is sufficiently reliable as determined by
the sort of inquiry mandated in Daubert[1]; and (3) the
testimony assists the trier of fact, through the
application of scientific, technical, or specialized
expertise, to understand the evidence or to determine
a fact in issue.
United States v. Frazier, 387 F.3d 1244, 1260 (11th Cir. 2004)
(quotation omitted). “[T]rial judges have considerable leeway in
deciding in a particular case how to go about determining whether
particular expert testimony is reliable.” Curtis Inv. Co., 909 F.3d at
1350 (quotations omitted). And our review of the lower court’s
decision to admit expert testimony “is even more relaxed in a
bench trial situation, where the judge is serving as a factfinder and
1 Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993).
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we are not concerned about dumping a barrage of questionable
scientific evidence on a jury.” In re Teletronics, 904 F.3d at 1311–12
(quotations omitted).
Savannah Shoals does not appear to have raised a Daubert
challenge to Brigden’s expert report or testimony during the
proceedings below.2 It thus forfeits a challenge to Brigden’s
evidence based on his expert qualification pursuant to Rule 702. See
Lindsey v. Navistar Int’l Transp. Corp., 150 F.3d 1307, 1315 n.2 (11th
Cir. 1998).
In any event, the tax court did not erroneously rely on
Brigden’s purported mining opinions in its assessment of the
Property’s highest and best use as a quarry. Savannah Shoals flags
certain of the court’s statements it believes inappropriately relied
on Brigden’s mining conclusions:
[1] [Brigden] testified that aggregate is abundant in
the area. . . . [2] He opined that because aggregate is
abundant, the easement property is not unique and
this lack of uniqueness made the discounted cashflow
analysis an inappropriate method to value the
easement property. [3] He further opined that the
easement property did not have a comparative
2 At trial, the Commissioner offered Brigden as an “expert in real estate
valuation and qualified conservation contribution valuation,” and Savannah
Shoals did not object. Savannah Shoals does not challenge Brigden’s real
estate expertise on appeal.
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advantage as a quarry over other land with known
aggregate deposits.
But these statements demonstrate no erroneous conclusions by the
tax court. First, these statements simply describe Brigden’s
analysis; they do not indicate that the tax court adopted these
opinions as its own. Second, the court did not independently rely
on any of these opinions in forming its own conclusions about the
Property’s highest and best use.
As to the first statement, regarding the presence of aggregate
in the area, the court noted that Kenny, Savannah Shoals’s own
valuation expert, agreed that “aggregate is abundant in the region.”
Kenny testified that “the geological maps would support [the]
conclusion” that other properties in Hart County “also have
gneiss[ 3] under the surface,” although he noted that the presence of
gneiss did not necessarily make mining feasible on every property.
Thus, while the tax court did indeed conclude that aggregate was
abundant in the region, that conclusion did not depend on
Brigden’s testimony.
The second statement concerns the appropriate manner of
valuing such a property and the infeasibility of a DCF analysis
when aggregate is abundant. The tax court certainly did not adopt
Brigden’s opinion on this point, because it proceeded to discuss
3 The tax court noted that the experts “refer[red] to the subsurface materials
by different names including biotite gneiss and granitic gneiss,” while the
engineering contractors Savannah Shoals engaged to test the materials used
the term “aggregate,” which term the tax court adopted.
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aspects of each party’s DCF analysis at length. The court’s ultimate
rejection of Savannah Shoals’s projections resulted from its
determination that certain of Savannah Shoals’s experts’ estimates
were unreliable and unreasonable, not from any finding that a DCF
analysis was inappropriate. Thus this argument too fails.
The third statement relates to the relative value of the
Property as a quarry compared to its value for residential and
recreational uses. But because the tax court rejected a quarry as
the Property’s highest and best use, Brigden’s alternate valuation
of the Property as such is irrelevant. Although Brigden had initially
concluded that the Property’s highest and best use was for
residential and recreational uses, the Commissioner asked him to
analyze the value of the land “under the special assumption that a
mining use is the most probable or most likely use.” Based on that
analysis, Brigden opined that “land areas associated with known
deposits of granite do not enjoy a price premium above non-granite
area properties in Hart County.” But, again, since the tax court
rejected the proposed quarry use altogether, it did not erroneously
rely on this testimony.
Instead of relying on Brigden, the tax court’s rejection of a
quarry use relied primarily on the testimony of other expert
witnesses. The court’s analysis of the Property’s highest and best
use spans five and a half pages. After briefly describing Brigden’s
opinion and noting his conclusion—that the Property’s highest and
best use was “low-density residential and recreational uses”—the
court spent five pages considering the evidence presented by both
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parties’ mining and valuation experts regarding the financial
feasibility of a quarry on the Property. In its analysis, the court
discussed at length the competing evidence from Savannah
Shoals’s experts Gold, Capps, and Kenny and from the
Commissioner’s expert Gunesch, and based its ultimate
conclusions on what it determined to be the most reliable evidence
from each expert. 4 The court considered the size of the market for
aggregate and competition from existing quarries in the area before
concluding that Savannah Shoals’s experts “overestimated annual
sales of aggregate from the proposed quarry and overstated its
potential profitability.” Based on its determination that a quarry
was not financially feasible, the court was left with Brigden’s
proposed use drawn from his own real estate expertise—low
density residential and recreational uses—which the court found
credible and thus adopted as its own.
For these reasons, we find that the court did not erroneously
admit or rely on Brigden’s purported mining conclusions.
4 The court mentioned Brigden only once in this portion of its analysis, noting
that he opined that transportation costs limited a quarry’s market to a 25-mile
radius. The court observed that Savannah Shoals’s experts testified that the
market was limited to a 50-mile radius. The Commissioner’s mining expert
Gunesch opined that the “preferred market” for this particular Property would
be “limited to a maximum distance of about 20 miles in a northwest to
southeast orientation and about 6 miles in a southwest to northeast
orientation” because of competing quarries located close by. Based on
Gunesch’s evidence regarding competition from other quarries, the court
determined that “the proposed quarry’s market was likely limited to the area
less than 25 miles from the proposed quarry.”
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2. The tax court did not abuse its discretion by
considering or allowing Brigden to rely on certain
geological maps
Federal Rule of Evidence 703 allows an expert to base his
opinion on the “kinds of facts or data” that “experts in the particular
field would reasonably rely on,” even if those facts might not be
separately admissible. 5 Fed. R. Evid. 703. Savannah Shoals
contends that the court compounded its error regarding Brigden’s
testimony by allowing him to rely on geological maps and by itself
relying on the maps to reach certain conclusions about the
presence of aggregate in the region and the uniqueness of the
Property. It asserts that because Brigden was a real estate expert
rather than a mining expert, it was inappropriate for him to use
these maps in forming his opinions pursuant to Federal Rule of
Evidence 703. It further argues that because the maps themselves
were merely included in Brigden’s report rather than being
separately admitted as evidence, they constituted hearsay that the
court erred in relying on as substantive evidence. The
Commissioner responds that that maps in question are from official
sources and thus were appropriate for judicial notice pursuant to
Federal Rule of Evidence 201.
5 As a reminder, while the tax court is bound by the Federal Rules of Evidence,
our review of the admission of expert testimony in a bench trial is “even more
relaxed” than usual, because “the judge is serving as a factfinder and we are
not concerned about dumping a barrage of questionable scientific evidence on
a jury.” In re Teletronics, 904 F.3d at 1311–12 (quotations omitted).
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Savannah Shoals’s challenge fails for three reasons. First, as
with the evidentiary challenge we discussed in the previous
subsection, there is no record that Savannah Shoals objected to the
inclusion of the maps in Brigden’s report—or his reliance on
them—during the litigation below, so it failed to preserve an
evidentiary challenge for appeal on that basis. See Cent. Baptist
Church of Albany, Ga., Inc. v. Church Mut. Ins. Co., 146 F.4th 1003,
1015 (11th Cir. 2025). So we need not determine whether Brigden’s
inclusion of these maps in his report was appropriate.
Second, the court could appropriately take judicial notice of
the maps. Federal Rule of Evidence 201 allows courts to take
judicial notice of “a fact that is not subject to reasonable dispute
because it . . . can be accurately and readily determined from
sources whose accuracy cannot reasonably be questioned.” Fed.
R. Evid. 201(b)(2). “[O]fficial government maps have long been
held proper subjects of judicial notice.” Gov’t of Canal Zone v.
Burjan, 596 F.2d 690, 694 (5th Cir. 1979). 6 For example, we have
previously taken judicial notice of the relative location of two
businesses based on a map. See United States v. Proch, 637 F.3d 1262,
1266 & n.1 (11th Cir. 2011).
Here, there is no reasonable dispute about the maps’
accuracy. The maps and accompanying data Brigden included in
6 Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc)
(holding that all decisions from the Fifth Circuit Court of Appeals issued before
the close of business on September 30, 1981, are “binding as precedent in the
Eleventh Circuit”).
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his report that Savannah Shoals appears to challenge were taken
from the United States Department of Agriculture’s Geospatial
Data Gateway, the United States Geological Survey, and the
Georgia Department of Natural Resources, all “sources whose
accuracy cannot reasonably be questioned.” Fed. R. Evid.
201(b)(2). Savannah Shoals itself “does not contest the accuracy of
these maps” and concedes that “the parties agree Hart County
contains other properties with granite or gneiss deposits.” The
maps were not the only evidence of aggregate throughout the
region: as noted above, Savannah Shoals’s own expert agreed that
“the geological maps would support [the] conclusion” that other
properties in Hart County “also have gneiss under the surface.” In
other words, the maps’ accuracy is not in dispute, making the maps
appropriate for judicial notice. See id. Thus, to the extent the court
relied on the maps themselves, it did not abuse its discretion. 7
Instead, Savannah Shoals’s true disagreement appears to be
with Brigden’s opinion that “land areas associated with known
deposits of granite do not enjoy a price premium above non-granite
area properties in Hart County.” Based on the presence of
aggregate throughout the region (as demonstrated by the maps),
Brigden opined that the Property was not unique in the region, so
even if it could be used as a quarry, its fair market value would not
7 It should be noted, though, that the tax court relied on the maps minimally,
if at all: it mentioned the maps only twice, in a single footnote discussing
Brigden’s evidence regarding the Property’s valuation, and it did not explicitly
rely on the maps for any factual findings.
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be greatly inflated. Savannah Shoals, on the other hand, insists that
its Property was unique—and thus more valuable than other
vacant land in the county—because not all aggregate is
economically viable, and it had performed feasibility studies to
ensure that “granite deposits could be profitably extracted.” 8
But this argument fails too. Brigden’s testimony about the
Property’s uniqueness related to the value of the Property, not to
its highest and best use. And, as discussed above, the court did not
rely on Brigden’s opinions regarding aggregate and mining in the
region to reject the proposed quarry use as the Property’s highest
and best use. Instead, it pointed to the small population and
corresponding low demand for aggregate within a commercially
reasonable range of the Property and the existence of competing
quarries closer to high-population areas, based on the testimony of
the other experts. Thus, the tax court did not erroneously rely on
8 As the tax court noted, though, Savannah Shoals’s own expert called this
assertion into question. Gold testified that “in general, the aggregate industry
does not use feasibility studies” because “rock is fairly easy to find.” Unlike
the studies needed for a metals mine to determine “whether what’s in the
ground can be developed into something that can be sold,” Gold testified that
“[t]he process of aggregates is quite simple.” “You take rock. It’s a good rock.
You crush it. You sell it. And so generally, there’s not a whole bunch of
stages.” The court separately determined that the testing performed at the
Property did not constitute a true feasibility study according to industry
standards. The fact that Capps, one of Savannah Shoals’s experts, categorized
the results of the testing as if a feasibility study had been performed led the
court to further question his reliability and the reliability of Savannah Shoals’s
other experts who based their work on his opinions.
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the maps themselves or on the opinions Brigden drew from the
maps in its highest-and-best-use analysis. 9
B. The tax court applied the appropriate legal test to analyze the
Property’s highest and best use
Next, Savannah Shoals challenges the method the tax court
used to reject its proposed highest and best use and adopt the
Commissioner’s instead. Savannah Shoals argues that caselaw and
the governing statutory provisions require the tax court “to
consider all four [highest and best use] criteria when determining
the fair market value of a qualified conservation easement
contribution.” Not only did the court fail to recite the correct legal
standard, Savannah Shoals argues, but the court disregarded any
criteria and instead “determine[d] the property’s [highest and best
use] solely on a market and demand analysis.” By reciting the
wrong standard and failing to apply the necessary criteria,
Savannah Shoals contends, the court committed legal error.
The Commissioner responds that while experts and the tax
court sometimes rely on a four-factor test, no authority has
mandated its application in this context. He contends that based
on the caselaw and regulations governing this analysis, it was
appropriate for the tax court to focus on the likelihood that the
Property would have been used in the way Savannah Shoals
proposed, an inquiry which necessarily involved consideration of
9 And, in fact, even in the court’s valuation analysis, Brigden’s “mining
opinions” were peripheral to its own conclusions.
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24-12661 Opinion of the Court 21
market demand for such a use. We agree with the Commissioner
that the tax court was not required to apply these four criteria and
that its analysis used the correct legal framework.
“We review the tax court’s legal conclusions de novo and its
findings of fact for clear error.” Palmer Ranch, 812 F.3d at 993.
“Whether the Tax Court used the correct standard to determine
fair market value is a legal issue.” Id. at 993–94 (alteration adopted)
(quotation omitted).
As a reminder, a taxpayer may claim a deduction for the
donation of a conservation easement based on the fair market
value of the easement. 26 C.F.R. § 1.170A-14(h)(3)(i). The fair
market value, in turn, depends on the highest and best use of the
underlying property before and after the easement’s creation