Court Cases
Although the Internal Revenue Code expressly provides for tax benefits for the donation of historic preservation easements that are made in the manner set out in the Code and Treasury Regulations, the Internal Revenue Service (the “IRS”) has identified easement donations as an area in which taxpayers may act in a manner that is abusive. In recent years, the IRS has increased its enforcement efforts associated with the donation of historic preservation easements. As a result, the IRS has conducted, and is continuing to conduct, examinations of a number of taxpayers who have made historic preservation easement donations to the Trust and to other easement-holding organizations throughout the country.
In general, the IRS has been challenging the value of the easement as determined by the taxpayer’s appraiser, and has frequently focused on whether the appraiser adequately considered the impact of local preservation ordinances restricting the property. Other issues that have been raised by the IRS have included whether the supporting appraisal is a “qualified appraisal” as defined by the Treasury Regulations, as amended by the PPA, and whether the language of the specific easement properly preserves the property for conservation purposes in perpetuity.
Some taxpayers have elected to challenge unfavorable determinations by the IRS. Some cases have been tried in the Tax Court and are awaiting a decision, others will be heard in the coming months, and others have not yet received a trial date. Below are links to court decisions and publicly available documents in pending cases before the Tax Court, which the Trust is including on this site by permission of the donor.
Pending Cases
Below are links to publicly available documents in some easement cases pending before the Tax Court and US Court of Appeals.
- Whitehouse Hotel Limited Partnership v. Commissioner, United States Court of Appeals, 5th Cir., No. 09-60085
The taxpayer appealed the 2008 Tax Court decision to the US Court of Appeals, 5th Cir. On August 10, 2010, the US Court of Appeals issued its decision, vacating and remanding the Tax Court's decision concerning valuation and penalties. - Scheidelman and Perry v. Commissioner, United States Court of Appeals, 2nd Cir., No. 10-3587
The taxpayers have appealed the 2010 Tax Court decision regarding tax deficiencies, and the IRS has filed a cross-appeal on penalties. The case is scheduled for oral argument in New York on December 15, 2011. - Kaufman v. Commissioner, United States Court of Appeals, 1st Cir., Nos. 11-2017 and 11-2022
The taxpayers have appealed the 2011 Tax Court decision regarding tax deficiencies and certain penalties, and the IRS has filed a cross-appeal on the deductibility of the cash contribution and the imposition of certain penalties. The submission of briefs has begun. - Friedberg and Moss v. Commissioner (Docket No. 9530-09)
The Tax Court recently issued T.C. Memo. 2011-238 regarding the petitioners' and respondent's motions for partial summary judgment.
- Tower 570 Company, L.P. v. Commissioner (Docket No. 15800-09)
- Estate of Mount, Deceased and Cook v. Commissioner (Docket No. 17390-09)
- Kafka v. Commissioner (Docket No. 26119-09)
- Zarlengo and McMahon-Zarlengo v. Commissioner (Docket No. 3701-10)
- Rothman v. Commissioner (Docket No. 17547-10)
- Gorra v. Commissioner (Docket No. 15336-10)
Decided Cases
Recent Cases
- Carpenter, et al. v. Commissioner, T.C. Memo. 2012-1
- Simmons v. Commissioner, United States Court of Appeals, DC Cir., No. 10-1063
- 1982 East, LLC v. Commissioner, T.C. Memo. 2011-84
- Schrimsher v. Commissioner, T.C. Memo. 2011-71
- Evans v. Commissioner, T.C. Memo. 2010-207
- Lord v. Commissioner, T.C. Memo. 2010-196
- Kiva Dunes Conservation LLC et. al. v. Commissioner, T.C. Memo. 2009-145
- Bruzewicz and Prossnitz v. United States of America No. 07-C-4074 (2009)
Older Cases
Before and after the IRS issued final regulations governing the circumstances under which easement donations would be allowable as charitable deductions (Treasury Regulations Section 1.170A-14), several cases relating to historic preservation easements were heard by the United States Tax Court. The following case citations cover five significant cases, issued between 1985 and 1990, resolving issues raised by the IRS relating to the valuation of historic preservation easement donations. A copy of each decision is provided.
- Dorsey v. Commissioner, T.C. Memo. 1990-242 (U.S. Tax Ct. 1990)
- Griffin v. Commissioner, T.C. Memo. 1989-130 (U.S. Tax Ct. 1988)
- Losch v. Commissioner, T.C. Memo. 1988-230 (U.S. Tax Ct. 1988)
- Nicoladis v. Commissioner, T.C. Memo. 1988-163 (U.S. Tax Ct. 1988)
- Hilborn v. Commissioner, 85 T.C. 677 (U.S. Tax Ct. 1985)