Bruzewicz v. United States tax court opinion

The District Court ruled for the IRS on summary judgment, holding that the failure to comply with I.R.C. 170(f)(8) was fatal to the deduction. The court rejected a substantial compliance argument in this respect.

The Tax Court disallowed the deduction on failure to comply with I.R.C. 170(f)(8) and that the consideration recitation did not satisfy 170(f)(8)(B)(ii) and (iii), which requires a statement of "whether the donee organization provided any goods or services in consideration, in whole or in part."

The Tax Court followed its holding in Simmons v. Commissioner, T.C. Memo 2009-208 (U.S.T.C. 2009) in ruling that the easement could be a contemporaneous written acknowledgment of no goods or services requirement of I.R.C. sec170(f)(8).

Tax Court Cases Discussing § 170 And Substantial Compliance

The Tax Court held that the conservation easement was not a 'qualified real property interest' because the substitution provision allowed the grantor to change the protected property and thus the easement was not 'granted in perpetuity' under I.R.C. 170(h)(2)(C).

In an unpublished order, the Tax Court denied the IRS’ motion for summary judgment reserving the proceeds issue for trial, found the deemed approval provision as not fatal because of the limitations, and rejected that the building area was “moveable.”

The Tax Court held that the easement did not meet the requirements of I.R.C. 170(h)(4)(A)(iv) and denied the deduction.

The IRS challenged a façade easement deduction both on 170(f)(8) grounds and on valuation. The donee submitted an amended Form 990 return for the year in which the donation was made. The tax court held that a traditional contemporaneous written acknowledgment was necessary and denied the deduction.

The appellate court affirmed the trial court in holding that the posting requirement was a covenant, and not a condition subsequent, of the easement, and therefore the failure to comply with this requirement was not grounds for rescission.

Tax Court rejected all of the IRS' 170(h) qualification arguments: the easement deeds qualified as 'contemporaneous written acknowledgements' under 170(f)(8), the appraisals substantially complied with the Treasury Regulations for 'qualified appraisals' and the appraiser’s valuation.