IRS Expert Finds Quarry Would Have Lost Millions
The government brought in an IRS valuation expert who, using Savannah Shoals’ own cost estimates, concluded that the quarry’s value was a staggering -$5.1 million. Even if a quarry had been viable, the government said, the partnership’s valuation was wildly inflated.
“No comparable properties in the region were selling anywhere near the $224,000 per acre claimed by Savannah Shoals,” the filing stated.
The IRS also noted a major red flag—the property had been purchased in 2007 for just $12,000 per acre, and similar land in the area was now selling for less than $5,000 per acre. Even designated mining tracts in the region topped out at $7,000 per acre, making Savannah Shoals’ valuation appear unrealistically high.
Savannah Shoals Pushes Back Against IRS Expert Testimony
On appeal, Savannah Shoals contends that the Tax Court wrongly relied on the IRS’ real estate appraiser, arguing that he lacked experience in mining and should not have been permitted to testify on quarry valuation.
“Interpreting geological maps and extrapolating from them requires specialized knowledge that a general real estate appraiser lacks,” Savannah Shoals argued in a December brief.
The partnership further criticized the Tax Court for accepting the IRS expert’s use of geological maps, alleging that he incorrectly assumed all land in the area had the same mining potential. Savannah Shoals claims that its specific tract of land was uniquely valuable due to its mineral composition.
