Authored by John Walker and Chris D. Treharne, ASA, MCBA, BVAL of Gibraltar Business Appraisals, Inc. a member firm of FCG Issue 13:5
Boltar, L.L.C., Joseph Calabria, Jr., Tax Matters Partner, Petitioner, v. Commissioner of Internal Revenue, Respondent
136 T.C. No. 14, Docket No. 25954-08, April 5, 2011
In a case involving a conservation easement and a related charitable deduction, the Tax Court determined that standards of reliability and relevance apply to non-jury trials. Under a challenge by the Respondent under the Federal Rules of Evidence § 702 and Daubert v. Merrell Dow Pharm., Inc. 509 US 579 (1993), the court dismissed the report provided by the Petitioner’s expert.
The Takeaway
The Petitioner’s expert failed a Daubert challenge and failed its client for the following reasons:
1) failed to apply common methodology,
2) valued the subject easement after relying on a draft of the easement (rather than the final version),
3) assumed that the subject property had been annexed by the city when it had not, and
4) valued the subject interest using a development plan that could not possibly fit on the subject parcel.