Averyt v. Commissioner

US Tax Court, 2012 TC Memo 198, July 16, 2012: Conservation Easement wording meets tax tests for contemporaneous written acknowledgment of gift.

The taxpayers made a donation of a conservation easement to a qualified conservation organization through a limited liability company, CMT. The donee sent a letter acknowledging the gift. The letter was timely, but did not, in the Court’s opinion, satisfy the Code and Treasury Regs. requirements for a ““contemporaneous written acknowledgment”.

A charitable contribution of $250 or more, including “qualified conservation contributions”, must be substantiated with a “contemporaneous written acknowledgment” from the donee organization. Internal Revenue Code §170(f)(8)(A). The acknowledgment must describe any property other than cash contributed (but not the value), whether any goods or services where provided to the donor in consideration, in whole or in part, for the property, and a description and good faith estimate of the value of any such goods or services. §170(f)(8)(B). Citing Schrimsher v. Commissioner, T.C. Memo. 2011-71, the Court noted that the contemporaneous written acknowledgment need not take any particular form.

CMT argued that the conservation easement deed itself constituted a contemporaneous written acknowledgment that complies with Code requirements, as was the case in Simmons v. Commissioner, T.C. Memo. 2009-208, aff’d, 646 F.3d 6 (D.C. Cir. 2011). As in Simmons, the easement was signed by a representative of the donee organization, was contemporaneous with the donation, and described the easement donated. The Court noted that the CMT conservation easement also “states that the conservation easement is an unconditional gift, recites no consideration received in exchange for it, and stipulates that the conservation deed constitutes the entire agreement between the parties with respect to the contribution of the conservation easement. Accordingly, the conservation deed, taken as a whole, provides that no goods or services were received in exchange for the contribution.”

The Court distinguished the CMT easement from the easement in Schrimsher, in which the easement did not satisfy the requirements for a contemporaneous written acknowledgment. In Schrimsher, the deed recited as consideration “the sum of TEN DOLLARS, plus other good and valuable consideration”.

The Court clarified that its decision in Durden v. Commissioner, T.C. Memo. 2012-140, does not require that the donee’s “affirmative statement” about goods or services provided to the “take any particular form or contain any particular wording”.

The Court held for the taxpayer and concluded that the wording of CMT’s deed of conservation easement meets all the tests for contemporaneous written acknowledgment of gift under §170(f)(8).

The decision is available at http://www.ustaxcourt.gov/InOpHistoric/AverytMemo.TCM.WPD.pdf.

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