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US Courts of Appeals Rule in Favor of Easement Donors in Two Cases

On June 15, 2012, the US Court of Appeals, 2nd Circuit, issued an opinion in Scheidelman v. Commissioner of Internal Revenue, vacating the Tax Court decision, which had disallowed deductions for the cash contribution and the easement donation, the latter on the basis of failing to obtain a “qualified appraisal” as defined by the Code and Treasury Regulations. The Court of Appeals found that the cash contribution was deductible and that the appraisal met the “qualified appraisal” standard. The case was remanded to the Tax Court for further proceedings with respect to the deductibility and value of the easement donation.

On July 19, 2012, the US Court of Appeals, 1st Circuit, issued an opinion in the case of Kaufman v. Shulman, Commissioner of Internal Revenue, vacating the Tax Court decision, which had disallowed the deduction for the easement donation on the basis that the easement failed to guarantee a perpetual gift, as required by the Code. The Court of Appeals found that the lender’s reservation of a priority claim to insurance and condemnation proceeds did not violate the perpetuity requirements. The case was remanded to the Tax Court to determine the question of easement value and associated penalties, if any.

The Trust for Architectural Easements is not a chartered bank or trust company, or depository institution. It is not authorized to accept deposits or trust accounts and is not licensed or regulated by any state or federal banking authority.