Palmolive Building Investors v. Commissioner

U.S. Tax Court, 149 T.C. No. 18, October 10, 2017: Outside 1st Circuit, full subordination of mortgagee’s right to insurance proceeds is required to qualify for charitable deduction.

Contrary to the ruling of the U.S. Court of Appeals for the 1st Circuit in Kaufman v. Shulman, 687 F.3d 21 (2012) (Kaufman III), the Tax Court holds in [...]

BC Ranch II, LP v. Commissioner (Bosque Canyon II)

U.S. Court of Appeals, Fifth Circuit, No. 16-60068, Cons. w/16-60069, August 11, 2017: Conservation easement may OK boundary changes.

The Bosque Ranch’s two conservation easements were disallowed as charitable deductions by the Tax Court in 2015 because that Court held the conservation easements failed the perpetuity requirements of the Tax Code, § 170(h)(2)(C). Bosque Canyon Ranch LP [...]

Partita Partners LLC v. US (Partita II)

U.S. District Court, S.D. New York, No. 15-cv-2561(PKC), July 10, 2017: Disqualification of façade donation opens door to valuation misstatement penalty.

In 2008, plaintiff Partita Partners LLC (“Partita”) claimed a federal tax deduction of $4,186,000 for the donation of a preservation easement to the Trust for Architectural Easements in the façade of a building that Partita owns. [...]

RP Golf V. Commissioner (RP Golf III)

U.S. Court of Appeals, Eighth Circuit, No. 16-3277, June 26, 2017: Upholds requirement of binding subordination at time of easement recording.

The court reviewed the facts and the tax court’s findings and holding in RP Golf v. Commissioner, 2016 T.C. Memo 80 (RP Golf II), and upheld the Tax Court. RP Golf, LLC claimed a charitable deduction [...]

RP Golf, LLC v. Commissioner (RP Golf II)

U.S. Tax Court, 2016 T.C. Memo 80, April 28, 2016: Mortgage subordination after recording of easement fails perpetuity test.

RP Golf, LLC (LLC) developed two private golf clubs. The purchase and development of the property was financed by loans secured by deeds of trust (mortgages) to Hillcrest and Great Southern banks. In December 2003, LLC (through its [...]

Ten Twenty Six Investors V. Commissioner

US Tax Court, 2017 TC Memo 115, June 15, 2017: Date of recording conservation easement determines year of eligibility for tax deduction.

The Tax Court agreed with the IRS that a conservation easement donated in 2004 but not recorded until 2006 did not create a qualified conservation contribution in 2004 and therefore did not entitle the donor [...]

15 West 17th Street LLC v. Commissioner

U.S. Tax Court, T.C. Memo. 2016-233, December 22, 2016: Preservation easement donee’s 990 cannot substitute for contemporaneous written acknowledgment letter.

The Internal Revenue Code requires that to qualify for a federal income tax deduction for contribution of a historic preservation easement or conservation easement valued at $250 or more, the taxpayer must substantiate the contribution by (among [...]

Partita Partners LLC v. United States

U.S. District Court, S.D. New York, 15-cv-2561 (PKC), Oct. 25, 2016: Façade easement protection of entire exterior must be absolute.

At issue was whether a historic preservation easement on a building in a historic district could qualify for a federal charitable tax deduction even if the easement holder could grant an exception to the prohibition against alteration [...]

Mountanos v. Commissioner (Mountanos II)

U.S. Court of Appeals, 9th Circuit, No. 14-71580, June 1, 2016: Upholds Tax Court decision about highest and best use.

In the Tax Court decision Mountanos v. Commissioner, T.C. Memo. 2013-138, June 3, 2013 (Mountanos I), the tax court agreed with the IRS that a federal tax deduction should not be allowed for a conservation easement Mountanos [...]

Carroll V. Commissioner

U.S. Tax Court, 146 T.C. 13, April 27, 2016: Formula for sharing post-extinguishment proceeds must conform exactly to IRS Regs.

Despite the federal Tax Code and Treasury Regulations’ requirement that to be eligible for a tax deduction a donated conservation easement must be enforceable in forever and always (“in perpetuity”), the law recognizes the possibility that even [...]

Gemperle v. Commissioner

U.S. Tax Court, T.C. Memo. 2016-1, January 4, 2016: No preservation easement tax deduction unless appraisal filed with tax return.

Gemperle, the taxpayer (petitioner), claimed a federal income tax deduction for 2007 and 2008 for the contribution of a historic preservation easement on the façade of a Chicago home. Contrary to the requirements of the Internal Revenue [...]

Atkinson v Commissioner

U.S. Tax Court, T.C. Memo 2015-236, December 9, 2015: Golf course conservation easement doesn’t qualify for deduction.

The Tax Court held that contribution of certain conservation easements on land at the subject golf course do not qualify for a Federal income tax charitable deduction because they do not meet the conservation purposes requirement of the tax Code, [...]

Legg v. Commissioner

U.S. Tax Court, 145 T.C. No. 13, December 7, 2015: Upholds IRS procedure for imposition of 40% accuracy related penalty on conservation easement overvaluation.

The issue in this case was about the internal procedure of the IRS when imposing an accuracy related penalty under Internal Revenue Code section 6662 for the misstatement of valuation of conservation easement [...]

Minnick v. Commissioner of Internal Revenue (Minnick II)

US Court of Appeals Ninth Circuit, No. 13-73234, August 12, 2015: Mortgage subordination at the time of easement gift, not later, required for deduction.

The US Tax Court held in Minnick v. Commissioner (Minnick I), 2012 T.C. Memo 345, December 17, 2012,  that Treasury Regulations §1.170A-14(g)(2) requires that, for a taxpayer to take a deduction for the [...]

Bosque Canyon Ranch LP v. Commissioner (Bosque I)

US Tax Court, T.C. Memo. 2015-130, July 14, 2015: Conservation easement deduction denied; inadequate baseline documentation; Belk violation.

Citing the precedent of the Belk II tax court memo, as affirmed by the Fourth Circuit decision in Belk III, the court denied any tax deduction for twin conservation easements that allowed for the alteration of boundaries between unrestricted [...]

Kaufman v. Commissioner (Kaufman V)

Court of Appeals, 1st Circuit, No. 14-1863, April 24, 2015: Penalty upheld for gross valuation misstatement.

The Kaufmans’ claim of a federal income tax deduction for donating a historic preservation easement (“preservation restriction” in Massachusetts) was denied after multiple court proceedings culminating in the Tax Court finding that the value of the easement was zero and that [...]

SWF Real Estate LLC v. Commissioner

Tax Court, T.C. Memo. 2015-63, April 2, 2015: Tax due on partnership’s easement tax credit allocation as disguised sale.

The prime issue in this case was how the IRS should treat a limited partnership transaction involving Virginia tax credits for the donation of a conservation easement, and the valuation for federal tax purposes of that donation. Also [...]

Minnick v. Ennis

Idaho Supreme Court, No. 41663, 2015 Opinion No. 1, January 9, 2015: Statute of limitations on malpractice claim for lawyer’s failure to seek mortgage subordination before recording conservation easement runs from when IRS raised issue.

The Minnicks engaged the law firm Hawley Troxell as counsel for a real estate project. As part of the project the Minnicks [...]

Mitchell v. Commissioner

US Court of Appeals, 10th Circuit, No. 13-9003, January 6, 2015: No deduction for conservation easement without mortgage subordination at time of grant.

This decision affirms the US Tax Court decision in Mitchell v. Commissioner, 138 T.C. 324 (2012) (Mitchell I) (of which the Tax Court rejected reconsideration in Mitchell II, T.C. Memo. 2013-204, August 29, 2013), [...]

Belk v. Commissioner (Belk III)

US Court of Appeals, Fourth Circuit, No. 13-2161, December 16, 2014: Allowing property swap disqualifies conservation easement deduction.

The court upheld the Tax Court ruling in Belk v. Commissioner, 140 T.C. No. 1 (2013) (Belk I), that a conservation easement that allows the parties to change which property is subject to the easement does not qualify for [...]