Ranch Springs to Malibu Valley: When Easement Valuation Lost Its Way

Publication: Tax Notes Federal, October 12, 2026

After the Tax Court's precedential opinion in Ranch Springs in 2025, many practitioners and the IRS read the decision as barring the income approach to value vacant land. In this article, William Stone argues the court never held that.

He shows that the court's criticism of the taxpayer's discounted cash flow model was unnecessary to its result, traces the confusion through later orders that raised the prospect of sanctions, and examines Malibu Valley, where the IRS itself relied on an income-method expert.

The court accepted the method, sustained about 61 percent of the deduction, and imposed no penalties, confirming that a properly built DCF remains a valid way to value real property.

Related services: Valuation Disputes · U.S. Tax Court Litigation

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