Façade easement deduction denied where taxpayer promised to grant easements in exchange for assistance in seeking zoning variances from local planning board

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In Seventeen Seventy Sherman Street v. Comm’r (T.C. Memo 2014-124), the Tax Court held that an understanding between the taxpayer and a development company under which the taxpayer would grant certain conservation easements if the development company assisted in obtaining variances constituted a quid pro quo, resulting in a complete loss of the deduction forRead More

Tax Court determines donors of façade easement are entitled to limited deduction; Appraisal and tax return “substantially complied” with Treasury Regulations

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In Zarlengo, et al v. Commissioner (T.C. Memo. 2014-161) (Vasquez, J.), the Tax Court issued a limited “win” for the taxpayer, holding that substantial compliance with the substantiation regulations was sufficient to support the taxpayer’s claim for a façade easement donation.  The Tax Court did, however, disallow the charitable deductions claimed in the year theRead More

Fifth Circuit overturns Tax Court’s imposition of gross valuation misstatement penalty in conservation easement case but leaves Tax Court’s highest and best use determination undisturbed

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The ongoing Whitehouse saga reaches what is likely to be its final resting place following the second decision by the Fifth Circuit (Whitehouse IV) upholding the Tax Court’s valuation finding on remand (Whitehouse III), but vacating the Tax Court’s decision to impose gross valuation misstatement penalties due to lack of reasonable cause.  While expressing sympathyRead More

North Dakota state law limiting conservation easements to 99 years prevents tax deduction

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A conservation easement in North Dakota was disqualified for a charitable contribution deduction because the state’s law limits easements to a maximum duration of 99 years, regardless of whether the parties agree otherwise.  The IRS determined, and the Tax Court agreed, that the 99-year limit kept the easement from protecting its conservation purposes “in perpetuity,”Read More