A $23 million tax deduction claimed by Savannah Shoals LLC for a conservation easement donation is under fire as the U.S. government pushes the Eleventh Circuit to uphold a lower court ruling that slashed the deduction to just $480,000.
At the heart of the dispute is whether the 103-acre Georgia property was truly suited for an aggregate quarry, as the partnership claimed, or if the land’s best use was for residential development. The government argues that Savannah Shoals failed to prove market demand for a quarry, rendering its high-value deduction unjustified.
Savannah Shoals’ Quarry Vision Clashes With Reality
According to the IRS and the U.S. Department of Justice, Savannah Shoals miscalculated its valuation by ignoring a fundamental question: Was there even a need for another quarry in the area?
“The partnership insisted on calculating the quarry’s potential profits but failed to consider whether the market even demanded one,” the government stated in its Friday brief.
The U.S. Tax Court previously ruled that there was no substantial demand for an aggregate quarry in 2017, the year Savannah Shoals donated the land to the Southeast Regional Land Conservancy Inc.. The government’s findings pointed to a saturated market, citing geological surveys and existing quarries better positioned near transportation hubs and larger populations.
Furthermore, the cost of transporting aggregate meant that any new quarry would have to rely on a local market within 25 miles—a region described as slow-growing with limited demand. Based on national aggregate consumption rates, the IRS estimated that the proposed quarry’s annual sales would max out at 250,000 tons—a far cry from the numbers Savannah Shoals projected.
