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]
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