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In November, 1994 an Amendment to the Conservation
Easement was recorded. This amendment further
restricted the property by allowing only one additional
residence rather than two. This restriction to one
additional residence is not considered a significant
restriction based on a review of the easements used in
this report and the market for properties in the area.
We disagree. It seems self-evident that such a restriction on
such a large property is significant. Hoeger did not include any
further analysis of the 1994 amendment in his report.
Accordingly, we adopt Wheeler's analysis of the 1994 amendment
and hold that the fair market value of the amendment to the MLR
easement was $290,000.
Issue 3. Whether Petitioner Is Liable for an Accuracy-Related
Penalty Under Section 6662(h) in 1993 or 1994
In the notice of deficiency, respondent determined that
petitioner was liable for accuracy-related penalties under
section 6662(h) for 1993 and 1994. Section 6662(h) applies to a
gross valuation misstatement where the value of property claimed
on a tax return is 400 percent or more of the value determined to
be correct. See sec. 6662(h)(2)(A), (e)(1). However, the
penalty is imposed only when the portion of the underpayment for
the taxable year attributable to the valuation misstatement
exceeds $5,000. See sec. 6662(e)(2).
In this case, the value of the MLR easement claimed on
petitioner's 1993 tax return, $1,080,000, is not 400 percent, nor
even 200 percent, or more of the value determined to be correct,
$800,000. In addition, we have accepted the value of the 1994
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