The U.S. Tax Court today issued a memorandum opinion that agreed with the IRS to disallow a golf course’s claim for a charitable contribution deduction of $16.4 million related to a donation of a conservation easement because, as the court found in part, all of the requirements of section 170 were not satisfied.
The property at issue was subject to pre-existing, unsubordinated mortgages on the date when the purported conservation easement was granted. The mortgages were not subordinated until months later. Because the easement could have been foreclosed between the time it was granted and the date when the mortgages were subordinated, the Tax Court concluded that the easement was not protected in perpetuity and, therefore, was not a qualified conservation contribution.
The case is: RP Golf, LLC v. Commissioner, T.C. Memo. 2016-80 (April 28, 2016). Read the Tax Court’s memorandum opinion [PDF 146 KB]
© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.