Blog · 15 October 2026

Conservation Easement Ruling in Toscano Holdings: FPAA, §7803(e) Appeals and What US CPA Firms Should Tell Clients

By Keshav Bansal, CA

A conservation easement partnership cannot void an FPAA just because the IRS issued it before the case reached Appeals. In Toscano Holdings, LLC v. Commissioner, T.C. Memo. 2026-90 (September 22, 2026; Judge Paris; Docket No. 12214-20), the Tax Court denied a renewed motion to invalidate the final partnership administrative adjustment (FPAA) in a 2016 Tennessee easement dispute. For US CPA firms advising §170(h) donors and syndicate investors, the case is a reminder that procedural complaints about Appeals rarely end an easement fight—valuation and substantiation still decide it.

The facts in Toscano Holdings

Per the opinion, Toscano Holdings, LLC is a Tennessee LLC (principal place of business in Georgia when the petition was filed) and a TEFRA partnership whose tax matters partner is Toscano Investments, LLC.

• On December 30, 2016 it donated a conservation easement encumbering roughly 380 acres in Roane County, Tennessee, to Foothills Land Conservancy.
• It claimed a $28.1 million noncash charitable contribution based on an appraisal by Clay Weibel, which treated mixed-use residential development as the highest and best use before the easement.
• The IRS received the 2016 Form 1065 on September 18, 2017.
• An IRS Senior Appraiser, Peter S. Crane, prepared a Limited Scope Appraisal Review dated September 6, 2019 valuing the easement at $6.7 million.

How the case skipped pre-FPAA Appeals

During the exam, Revenue Agent Rick Skinner asked in July–August 2019 for a Form 872-P extension so the case could go to Appeals, which needed 13 months remaining on the limitations period. On August 26, 2019, the partnership’s counsel declined the extension in writing and said it expected an FPAA.

The IRS issued a summary report with a closing-conference offer on January 15, 2020. The partnership missed the deadline and the file moved to Technical Services. A late closing-conference request followed on February 28, 2020, and a signed Form 872-P seeking Appeals arrived on March 16, 2020—declined because the case was already in Technical Services. The FPAA issued July 16, 2020, and the petition was filed October 13, 2020.

Appeals after the petition—and a criminal detour

The case went to Appeals in March 2021. On February 24, 2022, Weibel was federally indicted (United States v. Lewis, No. 21-cr-00231, N.D. Ga.). Appeals cancelled a November 2022 conference and on February 22, 2023 returned the case to Chief Counsel because of the criminal matter. Weibel was acquitted of all charges on September 22, 2023; the case returned to Appeals on October 5, 2023, and the partnership’s first motion to invalidate was denied as moot on February 23, 2024.

Appeals Officers Tate and Dubberke and Appeals Appraiser Steven Warshawsky held a settlement conference on July 24, 2024. A settlement offer and counteroffer were exchanged and declined, and the partnership filed its renewed motion on December 5, 2024.

What the Tax Court held

• §7803(e) does not require Appeals before an FPAA. The Taxpayer First Act provisions on the Independent Office of Appeals did not make a pre-FPAA Appeals hearing a condition of a valid FPAA.
• No looking behind the FPAA. Under the Greenberg’s Express rule, the court generally will not examine the IRS’s motives or administrative process leading to the notice.
• §7803(e)(5) did not apply. Its rules on denied Appeals referrals are tied to notices of deficiency; no §6212 notice of deficiency existed when the Form 872-P was refused.
• Post-petition Appeals was enough. The July 2024 conference gave the partnership Appeals consideration, and its Administrative Procedure Act challenge also failed.
• Settlement initiative. The partnership was not shown eligible for the IR-2024-174 (June 26, 2024) syndicated-easement settlement offer, which required an IRS letter.

The renewed motion was denied. Bloomberg Tax covered the ruling (September 22 and 28, 2026). Importantly, the court did not decide whether the easement was worth $28.1 million or $6.7 million—valuation remains for trial.

Conservation easement rules CPA firms should keep in view

These are general §170(h) rules, not holdings of Toscano, but they are where most easement cases are won or lost:

• What is deducted: a donor gives permanent development rights to a qualified land trust and deducts the drop in fair market value, measured by a before-and-after appraisal.
• Qualified appraisal and Form 8283: noncash gifts over $5,000 need a qualified appraisal and appraisal summary; see our charitable contribution substantiation guide.
• Perpetuity and conservation purpose: the restriction must be granted in perpetuity and serve a recognized conservation purpose.
• Listed transactions: syndicated deals offering write-offs of 2.5 times or more the investment are listed transactions requiring Form 8886 disclosure.
• Valuation fights: highest-and-best-use assumptions drive the number, and gaps like $28.1 million versus $6.7 million are why penalty exposure matters—see our accuracy-related penalties post.

What US CPA firms should tell clients now

1. Treat extension requests as strategy. Declining a Form 872-P may close the door to pre-FPAA Appeals; Toscano shows the court will not reopen it later.
2. Meet exam deadlines. A missed closing-conference date moved this file to Technical Services, and late requests did not reverse it.
3. Do not build a defense on procedure alone. Motions to invalidate an FPAA for lack of Appeals face the Greenberg’s Express rule; budget for a valuation trial.
4. Check settlement-initiative eligibility in writing. IR-2024-174 eligibility depended on receiving an IRS letter.
5. Calendar the petition. FPAA and deficiency notices carry strict petition deadlines; our notice of deficiency and 90-day petition guide covers the deficiency side.
6. Audit the appraisal file. Confirm appraiser qualifications, highest-and-best-use support and Form 8283 completeness before the return is filed, not after an FPAA.

Where this fits for Tax Brew readers

Toscano is a procedural loss for the partnership, not a valuation ruling. Firms with easement clients should expect the fight to turn on the appraisal and substantiation, and keep workpapers ready for Appeals and trial.

If partnership workpapers, Form 8283 packages or exam document requests are stretching capacity, outsourced tax prep and bookkeeping support for US CPA firms can handle the data gathering while your signing professionals keep the judgment calls. Email info@taxbrewglobal.com.

Check current IRS guidance: Toscano Holdings, LLC v. Commissioner, T.C. Memo. 2026-90 (September 22, 2026; Docket No. 12214-20); IRC §§170(h), 7803(e), 6212; IR-2024-174 (June 26, 2024); Bloomberg Tax (September 22 and 28, 2026). Confirm current IRS.gov guidance before advising clients. General information, not tax or legal advice. Sources as of 15 October 2026.