internal_revenue_service department of the treasury number info release date index no dear washington dc person to contact telephone number refer reply to cc ita - genin-144098-01 date date this letter responds to your letter of date relating to donations of items to the we are pleased to provide the following general information sec_170 of the internal_revenue_code allows subject_to certain limitations a deduction for charitable_contributions to or for_the_use_of organizations described in sec_170 payment of which is made within the taxable_year sec_170 of the code provides in part that the term charitable_contribution means a contribution or gift to or for_the_use_of a state a possession_of_the_united_states or any political_subdivision of any of the foregoing or the united_states or district of columbia but only if the contribution or gift is made for exclusively public purposes generally a fund that is an integral part of a governmental_unit is eligible to receive deductible charitable_contributions see revrul_73_296 1973_2_cb_67 contributions to united_states army unit funds which are integral parts of the army are deductible under sec_170 sec_1_170a-1 of the income_tax regulations provides that if a charitable_contribution is made in property other than money the amount of the contribution is the fair_market_value of the property at the time of the contribution reduced as provided in sec_170 and sec_1_170a-4 under sec_170 of the code the amount of any charitable_contribution of property is reduced by the amount of gain that would not have been long-term_capital_gain if the property had been sold by the taxpayer at its fair_market_value determined at the time of the contribution furthermore under sec_170 in the case of a contribution of tangible_personal_property if the use by the donee is unrelated to its purpose or function then the charitable_contribution must be reduced by the amount of gain which would have been long-term_capital_gain if the property contributed had been sold by the taxpayer at its fair_market_value sec_1_170a-4 of the regulations provides in part that if an individual or corporation contributes ordinary_income_property as defined in sec_1_170a-4 the amount of the charitable_contribution is reduced by the gain that would have been genin-144098-01 recognized as ordinary_income if the property had been sold by the donor at its fair_market_value at the time of its contribution sec_1_170a-4 of the regulations defines the term ordinary_income_property to mean property any portion of the gain on which would not have been long-term_capital_gain if the property had been sold by the donor at its fair_market_value at the time of its contribution such term includes property held by the donor primarily for sale to its customers in the ordinary course of its trade_or_business certain property created by the donor and a capital_asset held by the donor for not more than one year sec_1_170a-4 of the regulations defines unrelated use for purposes of sec_170 as in the case of a contribution of property to a governmental_unit the use of such property by such unit for other than exclusively public purposes sec_1_170a-4 of the regulations allows a taxpayer who makes a charitable_contribution of tangible_personal_property to treat such property as not being put to an unrelated use by the donee if a the taxpayer establishes that the property is not in fact put to an unrelated use by the donee or b at the time of the contribution or at the time the contribution is treated as made it is reasonable to anticipate that the property will not be put to an unrelated use by the donee in the case of a contribution of tangible_personal_property to or for_the_use_of a museum if the object donated is of a general type normally retained by such museum or other museums for museum purposes it will be reasonable for the donor to anticipate unless he has actual knowledge to the contrary that the object will not be put to an unrelated use by the donee whether or not the object is later sold or exchanged by the donee sec_170 of the code disallows a deduction for a charitable_contribution of dollar_figure or more unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgment of the contribution by the donee organization that meets the requirements of sec_170 sec_170 requires that the acknowledgment include the following information a the amount of cash and a description of any property other than cash contributed b whether the donee organization provided any goods or services in consideration in whole or in part for any property contributed and c a description and good_faith estimate of the value of any goods or services provided sec_1_170a-13 of the regulations provides in part that if contributions of property other than money exceed dollar_figure the taxpayer shall maintain written records and file a statement as required by the return form or its instructions indicating the manner and date_of_acquisition and the taxpayer’s basis in the contributed_property for noncash contributions in excess of dollar_figure the taxpayer must submit the required statement by completing form_8283 noncash charitable_contributions enclosed sec_1_170a-13 of the regulations provides certain substantiation requirements for deductions by an individual in excess of dollar_figure for noncash charitable_contributions specifically a donor must obtain a qualified_appraisal and attach to the donor's income_tax return a fully completed appraisal_summary form noncash charitable_contributions a qualified_appraisal includes an appraisal by a qualified_appraiser that genin-144098-01 is made not earlier than days prior to the date of the contribution of the appreciated_property nor later than the due_date including extensions of the donor’s return on which the deduction is claimed sec_170 of the code allows a deduction for contributions by individuals to a governmental_unit described in sec_170 of up to percent of the taxpayer's contribution_base for the taxable_year sec_1_170a-9 of the regulations provides that a governmental_unit is described in sec_170 if it is referred to in sec_170 sec_170 defines charitable_contribution as including a gift to or for_the_use_of the united_states but only if made for exclusively public purposes sec_170 of the code provides that for purposes of sec_170 the term contribution_base means adjusted_gross_income computed without regard to any net_operating_loss_carryback to the taxable_year under sec_172 generally taxpayers who itemize their deductions may deduct the fair_market_value of contributions to a governmental_unit subject_to the requirements and limitations of sec_170 of course the tax consequences of any such contribution are determined based upon the facts and circumstances of that contribution to further explain rules for charitable_contribution deductions we have enclosed publication charitable_contributions and publication determining the value of donated property i hope this information is helpful please call sean dwyer at the number above if you have any questions sincerely karin g gross senior technician reviewer branch office of associate chief_counsel income_tax accounting enclosures pub pub form_8283 and instructions


internal_revenue_service department of the treasury u i l number release date legend partnership p o box ben franklin station washington dc contact person telephone number refer reply to cc dom p si - plr-116676-98 date date agency project state city district bank a b plr-116676-98 c d e f g h i j k l m n o p q dear this letter responds to your letter dated date and subsequent submissions on behalf of partnership requesting a letter_ruling that provided the requirements of sec_42 of the internal_revenue_code are otherwise satisfied with respect to the project the acquisition and rehabilitation costs of the buildings and land comprising the project will be treated as being financed by tax-exempt_bonds for purposes of sec_42 the internal_revenue_service district_office that has examination jurisdiction over partnership is district partnership represents that the facts are as follows plr-116676-98 facts partnership a state limited_partnership was formed to acquire develop operate and manage the project an existing a building b unit multi-family low-income_housing residential apartment complex in city partnership has acquired the project and anticipates that it will qualify for low-income_housing tax_credits partnership acquired the project from the u s department of housing and urban development hud for dollar_figurec by issuing a note in the amount of dollar_figured and making a down payment of dollar_figuree in cash there was a period of at least years between the date partnership acquired the project and the date that the project was last placed_in_service or the date of the most recent non-qualified substantial improvements of the project partnership intends to rehabilitate the project into a low-income_housing project that will qualify for low-income_housing tax_credit for acquisition and rehabilitation costs under sec_42 the project was placed_in_service in f the applicable_percentage for the low- income housing acquisition and rehabilitation credits will be the percent value credit ie the percent credit the aggregate basis of the buildings and the land comprising the project is expected to be dollar_figureg land and building acquisition costs of dollar_figurec plus rehabilitation costs of dollar_figureh equals total projected aggregate basis of dollar_figureg the rehabilitation work is almost finished there is only a remote likelihood that the total rehabilitation_expenditures incurred by partnership for the project will be more or less than dollar_figureh the basis of the buildings comprising the project on which low-income_housing tax_credit for acquisition and rehabilitation costs are intended to be taken is the cost_basis of such buildings as determined under sec_1012 agency will lend partnership dollar_figurei for permanent financing of the project the proceeds of the agency loan are derived from tax-exempt_bonds that were issued by agency on j under the volume_cap imposed by sec_146 the agency loan is expected to be made to partnership in k at the time the agency loan is made to partnership the full amount of the loan dollar_figurei will be used to repay the portion of the outstanding construction loan of dollar_figurel from bank that financed the rehabilitation costs of dollar_figureh of the project all agency loan proceeds will be spent by partnership before the end of the first year of the credit_period for the project partnership will make equal monthly amortizing payments on the agency loan over its m life with the first monthly installment due approximately n days after the agency loan is made neither the tax-exempt_bond underlying the agency loan nor the agency loan itself will be redeemed on or before the end of the first year of the credit_period for the project the agency loan of dollar_figurei is expected to be percent or more of the aggregate basis of dollar_figureg for the buildings and land comprising the project at each of the following dates i the date the low-income_housing tax_credits for the project are allowed ii the plr-116676-98 date the project is placed_in_service iii the date the agency loan is made to partnership and iv the last day of the first year of the credit_period for the project if the agency loan is made to partnership in k the first year of the credit_period for the project will be o the placed-in-service year however if such loan is not made in k partnership expects that the agency loan will be made in p in which case partnership will elect q the taxable_year succeeding o as the first year of the credit_period for the project ruling requested provided the requirements of sec_42 are otherwise satisfied with respect to the project the acquisition and rehabilitation costs of the buildings and land comprising the project will be treated as being financed by tax-exempt_bonds for purposes of sec_42 law and analysis sec_42 provides a tax_credit for investment in low-income_housing buildings placed_in_service after date sec_42 provides that the amount of credit determined under sec_42 for any taxable_year with respect to any building shall not exceed the housing_credit_dollar_amount allocated to such building under sec_42 sec_42 provides that an allocation generally shall be taken into account under sec_42 only if it is made not later than the close of the calendar_year in which the building is placed_in_service sec_42 provides that the aggregate housing_credit_dollar_amount which a housing_credit_agency may allocate for any calendar_year is the portion of the state housing_credit ceiling allocated under sec_42 for such calendar_year to such agency sec_42 provides that sec_42 does not apply to any portion of the credit otherwise allowable under sec_42 which is attributable to eligible_basis financed by any obligation the interest on which is exempt from tax under sec_103 if- i ii such obligation is taken into account under sec_146 and principal payments on such financing are applied within a reasonable period to redeem obligations the proceeds of which were used to provide such financing plr-116676-98 for purposes of sec_42 sec_42 h b provides that if percent or more of the aggregate basis of any building and the land on which the building is located is financed with such tax-exempt obligations sec_42 does not apply to any portion of the low-income_housing_credit allowable under sec_42 with respect to such building in the present case partnership represents that the aggregate basis of the buildings and land comprising the project is expected to be dollar_figureg land and building acquisition costs of dollar_figurec plus rehabilitation costs of dollar_figureh equals total projected aggregate basis of dollar_figureg partnership further represents that the proceeds of tax-exempt_bonds subject_to the volume_cap imposed by sec_146 will be used by agency to lend partnership dollar_figurei that will be expended by the end of the first year of the credit_period to repay the portion of the outstanding bank construction loan that financed the rehabilitation costs of dollar_figureh for the project partnership also represents that the agency loan and these underlying tax-exempt_bonds will be outstanding at the end of the first year of the credit_period moreover partnership represents that the agency loan of dollar_figurei is expected to be percent or more of the aggregate basis of dollar_figureg for the buildings and land comprising the project at the end of the first year of the credit_period accordingly based solely on the representations and relevant law as set forth above we conclude that the acquisition and rehabilitation costs of the buildings and land comprising the project will be treated as being financed by tax-exempt_bonds for purposes of sec_42 provided the requirements of sec_42 are otherwise satisfied with respect to the project this ruling is contingent upon the 50-percent aggregate basis requirement in sec_42 being satisfied at the end of the first year of the credit_period with respect to the project no opinion is expressed or implied regarding the application of any other provisions of the code or regulations including sec_103 and specifically we express no opinion on whether the project qualifies for the low-income_housing_credit under sec_42 the validity of costs included in the project’s basis whether the requirements of sec_42 are met or whether the 50-percent aggregate basis requirement in sec_42 is met plr-116676-98 in accordance with the power_of_attorney filed with this request we are sending a copy of this letter_ruling to partnership this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely yours kathleen reed kathleen reed assistant to the branch chief branch office of assistant chief_counsel passthroughs and special industries enclosure copy


internal_revenue_service number release date index number -------------------------- -------------------------------------- ------------------------------- re -------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------- id no ------------------ telephone number ---------------------- refer reply to cc psi plr-138998-16 date june legend date husband wife trust trust trust -------------------------- ---------------------------------------------------- ---------------------------------------------------- --------------------------------------------------------------------------------------- --------------------- --------------------------------------------------------------------------------------- ----------------------------------------------------- --------------------------------------------------------------------------------------- ------------------------------------------------------------- child child year accounting firm ------------ ----------------------------- ------------------------------------ ------- dear ------------------ this letter responds to the letter dated date submitted by your authorized representative requesting an extension of time pursuant to sec_2642 of the internal_revenue_code and sec_301_9100-3 of the procedure and administration regulations to elect out of the generation-skipping_transfer gst_exemption automatic allocation rules facts the facts and representations submitted are as follows on date a date after date husband and wife established an inter_vivos irrevocable_trust trust trust established four separate trusts for the benefit of husband’s and wife’s children trust and have gst tax potential this ruling plr-138998-16 request applies to trust and trust established as the gst non-exempt trusts for the benefit of child and child on date husband made transfers of cash and limited_partnership interests to each of trust and trust on date wife made transfers of cash to each of trust and trust accounting firm discussed and advised husband and wife of the rules under sec_2632 regarding the automatic allocation of gst_exemption and the ability to elect out of the automatic allocation of gst_exemption by making an election under sec_2632 on respective year form sec_709 united_states gift and generation-skipping_transfer_tax return accounting firm reported husband’s date transfers to trust and trust and wife’s date transfers to trust and trust including an election out of the automatic allocation of gst_exemption with respect to the date transfers and all future transfers to trust and trust however husband and wife failed to timely file their respective form sec_709 accordingly husband and wife failed to elect out of the automatic allocation of gst_exemption for the date transfers and all future transfers to trust and trust husband and wife respectively requests an extension of time to elect out of the automatic allocation rules with respect to transfers made in year and all future transfers made to trust and trust husband and wife represent that no taxable_distributions taxable terminations or any other events have occurred with respect to trust that would give rise to a gst tax_liability law and analysis sec_2601 imposes a tax on every gst a gst is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip sec_2602 provides that the amount of the tax imposed by sec_2601 is the taxable_amount multiplied by the applicable_rate sec_2641 defines the applicable_rate as the product of the maximum_federal_estate_tax_rate and the inclusion_ratio with respect to the transfer sec_2641 provides that the term maximum_federal_estate_tax_rate means the maximum rate imposed by sec_2001 on the estates of decedents dying at the time of the taxable_distribution taxable_termination or direct_skip as the case may be under sec_2642 the inclusion_ratio with respect to any property transferred in a generation-skipping_transfer is the excess if any of over the applicable_fraction the plr-138998-16 applicable_fraction as defined in sec_2642 is a fraction the numerator of which is the amount of the gst_exemption under sec_2631 allocated to the trust or to property transferred in a direct_skip and the denominator of which is the value of the property transferred to the trust or involved in the direct_skip sec_2631 provides that for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption amount which may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2631 provides that any allocation under sec_2631 once made shall be irrevocable sec_2632 provides that any allocation by an individual of his or her gst_exemption under sec_2631 may be made at any time on or before the date prescribed for filing the estate_tax_return for such individual’s estate determined with regard to extensions regardless of whether such a return is required to be filed sec_2632 provides that the manner in which allocations are to be made shall be prescribed by forms or regulations issued by the secretary sec_2632 provides that if any individual makes an indirect_skip during such individual’s lifetime any unused portion of such individual’s gst_exemption is treated as allocated to the property transferred to the extent necessary to make the inclusion_ratio for such property zero if the amount of the indirect_skip exceeds such unused portion the entire unused portion shall be allocated to the property transferred under sec_2632 the term indirect_skip means any transfer of property other than a direct_skip subject_to the tax imposed by chapter made to a gst_trust as defined in sec_2632 under sec_2632 a gst_trust is a_trust that could have gst potential with respect to the transferor unless the trust satisfies any of the exceptions listed in sec_2632 i - vi under sec_2632 and ii an individual may elect to have the automatic allocation rule in sec_2632 not apply to an indirect_skip or to any or all transfers made by such individual to a particular trust sec_2632 provides that an election under sec_2632 may be made on a timely filed gift_tax_return for the calendar_year for which the election is to become effective sec_26_2632-1 of the generation-skipping_transfer_tax regulations provides in relevant part that a transferor may prevent the automatic allocation of gst_exemption elect out with respect to one or more or all current-year transfers made by the transferor to a specified trust or trusts plr-138998-16 sec_26_2632-1 provides that to elect out the transferor must attach an election out statement to a form_709 filed within the time period provided in sec_26_2632-1 in general the election out statement must identify the trust and specifically must provide that the transferor is electing out of the automatic allocation of gst_exemption with respect to the described transfer or transfers under sec_26_2632-1 to elect out the form_709 with the attached election out statement must be filed on or before the due_date for timely filing the form_709 for the calendar_year in which the first transfer to be covered by the election out was made sec_2642 provides generally that the secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of gst_exemption described in sec_2642 or and an election under sec_2632 or c sec_2642 provides that in determining whether to grant relief under sec_2642 the secretary shall take into account all relevant circumstances including evidence of intent contained in the trust instrument or instrument of transfer and such other factors as the secretary deems relevant for purposes of determining whether to grant relief the time for making the allocation or election shall be treated as if not expressly prescribed by statute notice_2001_50 2001_2_cb_189 provides that under sec_2642 the time for allocating the gst_exemption to lifetime transfers and transfers at death the time for electing out of the automatic allocation rules and the time for electing to treat any trust as a generation-skipping_transfer_trust are to be treated as if not expressly prescribed by statute the notice further provides that taxpayers may seek an extension of time to make an allocation described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-1 sec_301_9100-2 provides an automatic_extension of time for making certain elections sec_301_9100-3 provides the standards used to determine whether to grant an extension of time to make an election whose date is prescribed by a regulation and not expressly provided by statute in accordance with sec_2642 and notice_2001_50 taxpayers may seek an extension of time to make an allocation described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 sec_301_9100-3 provides in part that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction plr-138998-16 of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly husband and wife are each granted an extension of time of days from the date of this letter to make an election under sec_2632 that the automatic allocation rules not apply to their respective date transfers to trust and trust each election should be made on supplemental form sec_709 for year the supplemental form sec_709 should be filed with the cincinnati service_center at the following address internal_revenue_service cincinnati service_center - stop cincinnati oh you should attach a copy of this letter to the supplemental form_709 we have enclosed a copy for this purpose except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination sincerely office of associate chief_counsel passthroughs special industries lorraine e gardner by ______________________________ lorraine e gardner senior counsel branch office of associate chief_counsel passthroughs special industries enclosures


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division uniform issue list bec 20q9 sent epira tz erkkkkkekeereakake rakkkeekakrae eea ke rkekeeeekkekereererek legend taxpayer a erk kekrerrerere ira xx re areraerrrekrrrkrkeererkreererereereerereark hee aa a eee eee eee ee eee eee eere eerereeerereereaeeee dea r kekkkrkkekkeke this is in response to your ruling_request dated date from your authorized representative in which you request a ruling on whether the percent additional income_tax contained in sec_72 of the internal_revenue_code the code applies to withdrawals from your individual_retirement_arrangement the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer a an employee of an investment counseling firm for years was diagnosed with multiple sclerosis in in date symptoms from the disease forced him to leave his position and apply for social_security disability benefits in date he was granted disability benefits from the social_security administration taxpayer a’s disability continues to this time taxpayer a is below years of age and he wishes to withdraw unequal non-periodic payments from ira x before he reaches age based on the above facts and representations you request a ruling that the percent additional tax contained in sec_72 of the code will not apply to taxpayer a with respect to the distributions taken from ira x 24u1u1103 sec_72 of the code imposes an additional income_tax on certain early distributions from qualified_retirement_plans including iras the tax is generally equal to percent of the amount includable in gross_income sec_72 of the code provides that the additional tax does not apply to certain distributions including distributions attributable to the employees being disabled within the meaning of sec_72 and distributions that are part of a series of substantially_equal_periodic_payments not less frequently than annually made for the life or life expectancy of the employee or the joint lives or joint life expectancies of such employee and his designated_beneficiary sec_72 of the code provides that an individual shall be considered to be disabled if he or she is unable to engage in any substantial_gainful_activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long continued and indefinite duration sec_1_72-17 states that whether or not the impairment of in a particular case constitutes a disability is to be determined with reference to all the facts in the case an example of an impairment which would ordinarily be considered as preventing substantial_gainful_activity includes certain progressive diseases which have resulted in the physical loss or atrophy of a limb such as multiple sclerosis in this case taxpayer a has demonstrated that he has multiple sclerosis and is unable to engage in any substantial_gainful_activity by reason of this physical impairment further based on the documentation submitted in support of the ruling_request it does not appear that taxpayer a can be expected to recover from this physical impairment in the foreseeable future accordingly we rule that taxpayer a meets the requirements of sec_72 of the code and therefore the percent additional income_tax imposed by sec_72 of the code will not apply to the withdrawal of funds by taxpayer a from ira x in unequal nonperiodic payments prior to his attaining age no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter_ruling is being sent to your authorized representative s if you wish to inquire about this ruling please contact d number by phone at - please address all correspondence to se t ep ra t2 sincerely nonzed le sj ft hg f wv donzell littlejohn manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose cc rekkkekekaerekikek ruekrakeerekrek rukeerareeere ke rereeeeer


t c memo united_states tax_court kelly v kaeckell petitioner v commissioner of internal revenue respondent docket no 6607-o1l filed date kelly v kaeckell pro_se karen l baker and charles m berlau for respondent memorandum opinion armen special_trial_judge this matter is before the court on respondent’s motion for summary_judgment filed pursuant to rule respondent contends that there is no dispute as to any material fact with respect to this levy action and that unless otherwise indicated all section references are to the internal_revenue_code as amended and all rule references are to the tax_court rules_of_practice and procedure - - respondent’s determination to proceed with collection of petitioner’s outstanding tax_liabilities for the taxable years through should be sustained as a matter of law summary_judgment is intended to expedite litigation and avoid unnecessary and expensive trials fla peach corp v commissioner 90_tc_678 summary_judgment may be granted with respect to all or any part of the legal issues in controversy if the pleadings answers to interrogatories depositions admissions and any other acceptable materials together with the affidavits if any show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law rule a and b 98_tc_518 affd 17_f3d_965 7th cir 90_tc_753 85_tc_527 the moving party bears the burden of proving that there is no genuine issue of material fact and factual inferences will be read in a manner most favorable to the party opposing summary_judgment 85_tc_812 79_tc_340 as explained in detail below there is no genuine issue as to any material fact and a decision may be rendered as a matter of law accordingly we shall grant respondent’s motion for summary_judgment background petitioner failed to file federal_income_tax returns for the taxable years through the record shows that respondent prepared substitutes for return for petitioner’s taxable years through on date respondent issued a notice_of_deficiency to petitioner determining deficiencies in and additions to his federal income taxes for through as follows additions to tax_year deficiency sec_6651 sec_6654 a dollar_figure dollar_figure dollar_figure big_number dollar_figure dollar_figure dollar_figure dollar_figure big_number dollar_figure dollar_figure big_number dollar_figure dollar_figure big_number dollar_figure dollar_figure dollar_figure dollar_figure the deficiencies were based principally on respondent’s determination that petitioner failed to report various amounts of nonemployee compensation as reported to respondent by third-party payors on forms petitioner has admitted that he received the date notice_of_deficiency however petitioner did not file a petition for redetermination with the court challenging the notice_of_deficiency - on date respondent mailed to petitioner a final notice---notice of intent to levy and notice of your right to a hearing pertaining to petitioner’s outstanding tax_liabilities for the years through on date petitioner filed with respondent a form request for a collection_due_process_hearing that included allegations challenging the proposed levy action on the ground that petitioner was not informed of the statutory provisions imposing a tax_liability on him on date appeals officer shauna wright wrote a letter to petitioner informing him of the nature of the appeals_office review process and providing him with transcripts of account for the years through the transcripts of account identified petitioner by name and social_security_number identified the type of tax and additions to tax assessed specified the taxable years in question and listed the amounts and dates that the assessments were entered on date appeals officer wright conducted an appeals_office hearing in this matter that petitioner attended prior to the hearing appeals officer wright reviewed txmoda transcripts of account dated date regarding petitioner’s accounts for the taxable years through a txmoda transcript contains current account information obtained from respondent’s master_file txmoda is the command continued - - the transcripts indicated that respondent made assessments against petitioner on date for the taxes and additions to tax set forth in the notice_of_deficiency dated date and for statutory interest in addition the transcripts of account indicated that on date respondent issued to petitioner notices and demand for payment of the assessed amounts on date respondent issued to petitioner a notice_of_determination concerning collection action s under sec_6320 and or the notice states that the appeals_office determined that it was appropriate to proceed with the collection of petitioner’s outstanding tax_liabilities by levy on date petitioner filed with the court an imperfect petition for lien or levy action seeking review of respondent’s notice_of_determination on date petitioner filed an amended petition alleging that the appeals officer failed to obtain verification from the secretary that the requirements of any applicable law or administrative procedure were met as required under sec_6330 continued code that is entered into respondent’s integrated data retrieval system idrs to obtain the transcript idrs is essentially the interface between respondent’s employees and respondent’s various computer systems at the time that the petition was filed petitioner resided in mission kansas -- - after filing an answer to the amended petition respondent filed a motion for summary_judgment asserting that there is no dispute as to a material fact and that respondent is entitled to judgment as a matter of law in particular respondent contends that the appeals officer’s review of the txmoda transcripts of account dated date satisfied the verification requirement imposed under sec_6330 petitioner filed an objection to respondent’s motion thereafter pursuant to notice respondent’s motion was called for hearing at the court's motions session in washington d c discussion sec_6331 provides that if any person liable to pay any_tax neglects or refuses to pay such tax within days after notice_and_demand for payment the secretary is authorized to collect such tax by levy on the person’s property sec_6331 provides that at least days before enforcing collection by levy on the person's property the secretary is obliged to provide the person with a final notice_of_intent_to_levy including notice of the administrative appeals available to the person sec_6330 generally provides that the commissioner cannot proceed with collection by levy until the person has been given notice and the opportunity for an administrative review of the matter in the form of an appeals_office hearing and if - j- dissatisfied with judicial review of the administrative determination see 115_tc_35 114_tc_176 sec_6330 prescribes the matters that a person may raise at an appeals_office hearing in sum sec_6330 c provides that a person may raise collection issues such as spousal defenses the appropriateness of the commissioner's intended collection action and possible alternative means of collection sec_6330 b provides that the existence and amount of the underlying tax_liability can be contested at an appeals_office hearing only if the person did not receive a notice_of_deficiency for the taxes in question or did not otherwise have an earlier opportunity to dispute the tax_liability see 114_tc_604 goza v commissioner supra sec_6330 provides for judicial review of the administrative determination in the tax_court or a federal district_court as may be appropriate petitioner argues that the appeals officer failed to obtain verification from the secretary that the requirements of all applicable laws and administrative procedures were met as required by sec_6330 we reject petitioner’s argument as previously stated petitioner has admitted that he received the notice_of_deficiency dated date however petitioner did not file a petition for redetermination with the court challenging the notice_of_deficiency - - because the record establishes that the appeals officer obtained and reviewed transcripts of account for petitioner’s taxable years through federal tax assessments are formally recorded on a record of assessment sec_6203 the summary record through supporting records shall provide identification of the taxpayer the character of the liability assessed the taxable_period if applicable and the amount of the assessment sec_301_6203-1 proced admin regs sec_6330 does not require the commissioner to rely on a particular document to satisfy the verification requirement imposed therein weishan v commissioner tcmemo_2002_88 lindsey v commissioner tcmemo_2002_87 tolotti v commissioner tcmemo_2002_86 duffield v commissioner tcmemo_2002_53 kuglin v commissioner tcmemo_2002_51 in this regard we observe that the transcripts of account on which the appeals officer relied as well as the transcripts of account that she furnished to petitioner before the hearing contained all the information prescribed in sec_301_6203-1 proced admin regs see weishan v commissioner supra lindsey v commissioner supra tolotti v commissioner supra duffield v commissioner supra kuglin v commissioner supra petitioner has not alleged any irregularity in the assessment procedure that would raise a question about the --- - validity of the assessments or the information contained in the transcripts of account see 115_tc_35 mann v commissioner tcmemo_2002_48 accordingly we hold that the appeals officer satisfied the verification requirement of sec_6330 cf 117_tc_117 petitioner has failed to raise a spousal defense make a valid challenge to the appropriateness of respondent’s intended collection action or offer alternative means of collection these issues are now deemed conceded rule b in the absence of a justiciable issue for review we conclude that respondent is entitled to judgment as a matter of law sustaining the notice_of_determination dated date finally we mention sec_6673 which authorizes the tax_court to reguire a taxpayer to pay to the united_states a penalty not in excess of dollar_figure whenever it appears that proceedings have been instituted or maintained by the taxpayer primarily for delay or that the taxpayer's position in such proceeding is frivolous or groundless the court has indicated its willingness to impose such penalties in collection review cases 115_tc_576 although we will not impose a penalty on petitioner pursuant to sec_6673 in the present case we admonish petitioner that the court shall consider imposing such a penalty should he return to -- - the court in the future and advance similar arguments to reflect the foregoing an order and decision will be entered granting respondent’s motion for summary_judgment


internal_revenue_service p o box cincinnati oh release number release date date date department of the treasury employer_identification_number contact person - id number contact telephone number uil dear you asked for advance approval of your scholarship grant procedures under internal_revenue_code sec_4945 this approval is required because you are a private_foundation that is exempt from federal_income_tax you requested approval of your scholarship program to fund the education of certain qualifying students also awards made under these procedures are scholarship or fellowship grants and are not taxable to the recipients if they use them for qualified_tuition_and_related_expenses subject_to the limitations provide in code sec_117 our determination we approved your procedures for awarding scholarships based on the information you submitted and assuming you will conduct your program as proposed we determined that your procedures for awarding scholarships and educational grants meet the requirements of code sec_4945 as a result expenditures you make under these procedures won't be taxable description of your request you will operate a scholarship program to provide financial assistance to individual recipients for study at an educational_organization described in code sec_170 you expect to award grants to applicants who have a strong record of academic or professional achievement in their scientific field clearly articulated research plans and hypothesis and a strong commitment to dissemination of scholarly yet accessible research additionally eligibility may include an assessment of financial need if an applicant is conducting post-doctoral work or is otherwise conducting research as part of their pursuit of an advanced degree letter catalog number 58263t your key selection criterion for individual grants is how the work of the individual fits in with your programmatic objectives specifically you will identify qualified recipients who have an expertise in a field of study that is important to your charitable purposes have a strong record of academic or professional achievement in their scientific field clearly articulated research plans and hypothesis and have a strong commitment to dissemination of scholarly yet accessible research you may also focus on identifying recipients engaged in study and research in areas in which you seek to promote learning and research or specific projects selected by your board to promote your purposes since some grants may be based on financial need applicants may be expected to document their financial need additionally applicants may be asked to provide academic transcripts professional references or examples of prior work there will be no limitations or restrictions in the selection procedures based upon race religion national or ethnic origin or other illegally discriminatory criteria your board_of directors or a person or persons to whom the board has delegated selection authority will select grant recipients a lottery system will not be used to select recipients the number and amount of individual grants that you may award will depend on your philanthropic priorities your available funds and the extent to which an individual grant component fits with the organizational grantees selected the following will not be eligible for your grants e e e your employees employees and the board_of directors of organizations controlled by one or more of your directors individuals who are related by blood or marriage to your employees or to employees or directors of organizations controlled by one or more of your directors you will maintain the records required by revrul_56_304 cum bull regarding distribution of charitable funds to individuals in some cases you will require an individual recipient to sign an agreement obligating the recipient to submit full reports on a periodic basis before any funds are disbursed in other cases if the individual is working at an organization receiving a grant from you you will require the organization to submit the reports on the activities of the individual as part of your grant agreement with the organization you will use these reports to monitor and evaluate the expenditure of funds and the progress made by each recipient furthermore you will require a supervising faculty_member research director or other appropriate_official depending on the research setting to review and approve the reports prepared by the individual recipient as required under sec_53_4945-4 any apparent misuse of funds will be promptly investigated and if funds have been misused you will require the recipient to return the funds immediately and will make no further distributions to that recipient while you have not developed criteria for renewing grants to individuals if a recipient continues to meet the eligibility criteria you may allow for an extension or make additional grant awards to or on behalf of a recipient letter catalog number 58263t basis for our determination the law imposes certain excise_taxes on the taxable_expenditures of private_foundations code sec_4945 a taxable_expenditure is any amount a private_foundation pays as a grant to an individual for travel study or other similar purposes however a grant that meets all of the following requirements of code sec_4945 is not a taxable_expenditure the foundation awards the grant on an objective and nondiscriminatory basis the irs approves in advance the procedure for awarding the grant the grant is a scholarship or fellowship subject_to sec_117 the grant is to be used for study at an educational_organization described in code sec_170 other conditions that apply to this determination this determination only covers the grant program described above this approval will apply to succeeding grant programs only if their standards and procedures don’t differ significantly from those described in your original request this determination applies only to you it may not be cited as a precedent you cannot rely on the conclusions in this letter if the facts you provided have changed substantially you must report any significant changes to your program to the cincinnati office of exempt_organizations at internal_revenue_service exempt_organizations determinations p o box cincinnati oh you cannot award grants to your creators officers directors trustees foundation managers or members of selection committees or their relatives all funds distributed to individuals must be made on a charitable basis and further the purposes of your organization you cannot award grants for a purpose that is inconsistent with code sec_170 you should keep adequate_records and case histories so that you can substantiate your grant distributions with the irs if necessary we've sent a copy of this letter to your representative as indicated in your power of letter catalog number 58263t attorney please keep a copy of this letter in your records if you have questions please contact the person listed at the top of this letter sincerely jeffrey cooper director exempt_organizations rulings and agreements letter catalog number 58263t


t c memo united_states tax_court east llc solomon d asser tax_matters_partner petitioner v commissioner of internal revenue respondent docket no filed date john p barrie for petitioner michael d wilder sameera y hasan michael y chin and michael a sienkiewicz for respondent memorandum findings_of_fact and opinion laro judge this case is a partnership-level proceeding under the tax equity and fiscal responsibility act of tefra publaw_97_248 96_stat_648 as amended the brief amicus curiae was filed by kathryn keneally for trust for architectural easements tefra partnership east llc llc claimed a dollar_figure deduction on its form_1065 u s return of partnership income return for a date contribution of a historic preservation easement facade easement and unused development rights udrs collectively donated property respondent disallowed that deduction in a notice of final_partnership_administrative_adjustment fpaa issued to llc’s tax_matters_partner solomon d asser mr asser respondent also determined in the fpaa that an accuracy-related_penalty applied to any underpayment_of_tax attributable to the dollar_figure disallowance respondent’s primary determination in that respect was that the penalty equaled percent of the underpayment because of a gross_valuation_misstatement under sec_6662 alternatively respondent determined that the penalty equaled percent of the underpayment because of negligence or disregard of rules or regulations under sec_6662 or a substantial_understatement_of_income_tax under sec_6662 we decide two issues first we decide whether llc is entitled to any part of the dollar_figure deduction we hold it i sec_1llc also claimed on the return that it was entitled to deduct cash contributions of dollar_figure which were related to the contribution of the donated property respondent did not disallow llc’s deduction of the cash contributions and that deduction is not in issue 2unless otherwise indicated section references are to the applicable versions of the internal_revenue_code and rule references are to the tax_court rules_of_practice and procedure entitled to none of the deduction second we decide whether llc is liable for a 20-percent accuracy-related_penalty under sec_6662 on any underpayment_of_tax attributable to the disallowance of the deduction we hold it is not liable for the penalty i preliminaries findings_of_fact some facts were stipulated and are so found the stipulations of fact and the accompanying exhibits are incorporated herein by this reference when the petition was filed llc’s principal_place_of_business was in new york new york new york city ii llc mr asser and nat a llc llc is a limited_liability_company formed in date primarily to purchase and operate real_estate pincite east 82d street in new york city llc has both domestic and foreign members llc is characterized for federal tax purposes as a partnership subject_to tefra during llc owned real_property subject property in new york city pincite east 82d street 3given our holding on the first issue respondent abandons his primary determination that the 40-percent accuracy-related_penalty under sec_6662 applies in this case b mr asser mr asser is one of llc’s domestic members and he is a managing member of llc and its tax_matters_partner he holds three professional degrees the first in architecture the second in urban planning and the third in architecture and urban design for more than two decades mr asser has been in the design building and rehabilitation of buildings in new york city including buildings in landmark districts he currently owns and operates a construction management and general contracting firm tecny group inc the primary business of which is the rehabilitation of buildings mr asser is familiar with the new york city landmarks preservation commission lpc and the new york city zoning rules as applicable to the subject property c nat the national architectural trust nat is tax exempt under sec_501 and a qualified_organization under sec_170 nat advertises that taxpayers can receive significant tax benefits by contributing historic preservation 4tecny group inc was formerly named tecny landmark corp we refer to both entities as tecny 5the lpc is a new york city agency responsible for identifying and designating new york city landmarks and historic districts the lpc is also responsible for protecting and preserving those landmarks and historic districts 6nat changed its name in to trust for architectural easements we refer to both entities as nat easements to nat and assists taxpayers who make such contributions to structure and report the contributions in a way that nat believes will entitle the taxpayers to the advertised benefits iii subject property as of date the date llc contributed the donated property to nat the subject property included a rectangular lot and a five-story townhouse townhouse the lot was approximately big_number square feet the townhouse was constructed in and had big_number square feet of living area excluding the cellar the subject property is sited within the metropolitan museum historic_district and is in a c5-1 restricted central commercial zoning district within the special madison avenue preservation district because of its location the subject property is subject_to new york city’s landmark and zoning laws those laws set the maximum building capacity for each square foot in a lot by reference to a formula known as the floor area ratio the laws also set a maximum height at which a structure may be built on the lot 7for example if a big_number square-foot lot had a floor area ratio of then the zoning rules would allow a building of up to big_number square feet on the lot to the extent that the building was less than big_number square feet the difference between the actual square footage and big_number would be the lot’s udrs iv mr asser’s contacts with nat mr asser first heard about nat in when one of his partners gave mr asser a nat promotional handout mr asser discussed the promotion with others in his business and with representatives of nat he also attended free seminars where nat representatives none of whom was a lawyer discussed the significant tax benefits that could be obtained through the contributions of preservation easements to nat with little to no practical effect on the use value or marketability of the servient property nat prepared and gave to mr asser literature discussing nat’s promotion mr asser read all of this literature and he read most of it before llc decided to participate in the promotion the literature suggested that a donor of an easement could receive a significant charitable_contribution_deduction for federal and state tax purposes equal to a set percentage between and percent but usually percent of the fair_market_value of the property burdened with the easement the literature indicated that the donor of a facade easement to nat would have to obtain nat’s permission before changing the property’s exterior the literature stated however since these properties reside in historic districts pre-approval of exterior changes is in most cases already required by local_government regulations and properties qualifying for this program are usually regulated by local_government ordinances that restrict exterior changes v llc’s purchase of the subject property llc purchased the subject property on date for dollar_figure million aiming to take advantage of the promotion while at the same time expeditiously reselling the subject property at a profit llc paid the dollar_figure million with dollar_figure million cash and dollar_figure million obtained through a mortgage loan from wachovia bank n a wachovia when llc purchased the subject property the townhouse was in need of complete renovation llc opted to renovate the townhouse as a single-family townhome and solicited and received the requisite approval of the lpc to fully gut the townhouse and to perform that renovation vi llc’s facade conservation_easement application on date before the renovation work began llc applied to nat for approval to contribute the donated property to nat and llc gave nat a required dollar_figure good_faith deposit the next day nat wrote to llc thanking it for its application on date the u s department of the interior national park service classified the subject property as a certified_historic_structure noting that this property is noteworthy for 8nat’s acceptance of a preservation easement was generally contingent on the donor making a cash contribution to nat of percent of the fair_market_value of the easement the good_faith deposit was a downpayment on the required cash contribution the retention of its exterior presence and much of the property’s period details remain within this neo-italian renaissance structure stands in contrast to its more retrained sic neighbors nat helped get the subject property certified as a historic_structure vii deed of easement nat structured llc’s contribution of the donated property to be complete when a conservation deed of easement deed of easement was executed by llc notarized and executed by nat on or about date nat prepared a deed of easement dated date the deed of easement prohibited llc and its successors collectively llc from altering the subject property’s protected facade without the written consent of nat or its successors collectively nat the protected facade included all exterior surfaces eg walls roofs and chimneys that were visible from the street level on the opposite side of east 82d street among other things the deed of easement prohibited llc from erecting any new or additional exterior improvements on the subject property or in the open space above or surrounding the townhouse without the express written consent of nat the deed of easement stated that the udrs included any and all rights however designated now or hereafter associated with the subject property or any other_property that may be used pursuant to applicable zoning laws or other government laws or regulations to compute permitted size height bulk or number of structures development density lot yield or any similar development variable on or pertaining to the subject property or any other_property the deed of easement also stated that neither llc nor nat could use exercise or transfer the udrs and that llc was donating those rights to nat for the purpose of forever removing and extinguishing those rights the deed of easement stated that in the event that the donated easement was ever extinguished through a judicial decree nat will be entitled to receive upon the subsequent sale exchange or involuntary_conversion of the subject property a portion of the proceeds from such sale exchange or conversion equal to the same proportion that the value of the initial donation bore to the entire value of the property at the time of the donation as estimated by a state licensed appraiser unless controlling state law provides that llc is entitled to the full proceeds in such situations without regard to the easement nat agrees to use any proceeds so realized in a manner consistent with the conservation_purpose of the original contribution viii llc’s subsequent financing of the property on date wachovia assigned the mortgage on the subject property to first republic bank on the same day llc took out a dollar_figure mortgage loan from first republic bank to finance the renovation of the subject property and llc and first republic bank consolidated all mortgages on the subject property into a single mortgage with a dollar_figure principal_amount first republic bank was then the sole lender and mortgage holder with respect to the subject property in or first republic bank was given the deed of easement and a proposed lender agreement lender agreement the lender agreement stated that first republic bank was subordinating its rights in the subject property to nat’s rights to enforce the conservation_purpose of the donated property in perpetuity subject_to the following conditions and stipulations a first republic bank and its assignees shall have a prior claim to all insurance proceeds as a result of any casualty hazard or accident occurring to or about the subject property and all proceeds of condemnation and shall be entitled to same in preference to nat until the mortgage the deed_of_trust is paid off and discharged notwithstanding that the mortgage the deed_of_trust is subordinate in priority to the easement c nothing contained in this paragraph or in this easement shall be construed to give first republic bank the right to violate the terms of this easement or to extinguish this easement by taking title to the subject property by foreclosure or otherwise first republic bank scrutinized the lender agreement to determine whether the agreement would affect the bank’s collateral value in the subject property and concluded that it would not first republic bank signed the lender agreement on date and the lender agreement was attached to and incorporated into the deed of easement ix appraisal llc obtained an appraisal appraisal from jerome haims realty inc haims on or about date the appraisal was dated date on which date llc’s renovation of the subject property was not complete llc had hired tecny and another firm to renovate the subject property tecny performed that renovation in and the exterior renovation was complete as of date but interior renovation eg improvements painting and finishing and installation of woodwork was still in progress the appraisal valued the donated property as of date which as of date was the estimated completion date of the interior renovation the appraisal projected that the date value of the facade easement would be dollar_figure and that the value of the udrs which the appraisal stated totaled big_number square feet would be dollar_figure for a total value of dollar_figure mr asser reviewed the appraisal and he accepted it even though he believed that the values were too low nat advertises to its contributors of conservation easements that haims is a preapproved appraiser of such easements and haims has performed over appraisals pursuant to those referrals as of the time of the appraisal llc and haims had a solid business relationship and llc had hired haims many times to obtain other appraisals x llc’s date application and crossover addendum on date nat gave llc a second facade conservation_easement application which was more detailed than the first application and a facade conservation_easement application crossover addendum crossover addendum on date mr asser on behalf of llc completed both the second application and the crossover addendum the crossover addendum stated that llc could contribute the donated property to nat in and qualify for a charitable_contribution_deduction for that year even though some of the deduction requirements would not be met until the crossover addendum required that llc obtain a final report from a qualified_appraiser within days and that llc give nat a completed closing package consisting of a signed and notarized deed of easement necessary recording documents and the cash contribution within days of the appraisal date or date whichever came first the crossover addendum stated that when those requirements were met nat would deliver to llc a completed form_8283 noncash charitable_contributions which had to be filed with the return for llc to receive a charitable_contribution_deduction for the donated property on date mr asser wrote nat a check for dollar_figure this check represented the balance of the cash contribution that nat required llc to make as a condition of llc’s contribution of the donated property xi the noncash contribution mr asser on behalf of llc executed the deed of easement on date and his signature was notarized on the same day four days later nat effected its acceptance of the donated property by executing the deed of easement nat sent llc an acknowledgment letter dated date thanking llc for the cash and noncash contributions and enclosing a completed copy of page of form_8283 the new york city department of finance office of the city register recorded the deed of easement on date xii appraisal before llc filed its return nat told mr asser that llc needed to get a new appraisal because the appraisal was prepared too early mr asser obtained a second appraisal from haims appraisal on date the appraisal valued the noncash contribution prospectively as of date which as of date was the estimated completion date of the interior renovation the appraisal concluded that the prospective fair market values of the facade easement and the udrs would be dollar_figure and dollar_figure respectively or dollar_figure in total xiii llc’s partnership tax_return llc timely filed the return on date the return included the second page of form_8283 and included the appraisal as an attachment the second page of form_8283 stated a contribution date of date and a fair_market_value of the donated property of dollar_figure the second page of form_8283 reported that the noncash contribution was a historic preservation easement and did not mention the udrs the appraisal stated that the noncash contribution consisted of the donated property xiv preparation of the return the return was prepared by irwin weissman mr weissman mr weissman has been a certified_public_accountant since and he has been a principal in a small accounting firm since mr weissman has prepared only one tax_return that claimed a charitable_contribution_deduction for a facade easement--the return xv appraisal mr asser obtained a third appraisal appraisal from haims in late haims prepared the appraisal on or about date the appraisal valued the donated property as of date opinion i burden_of_proof respondent determined that llc’s dollar_figure noncash contribution did not qualify for a charitable_contribution_deduction under sec_170 this determination is presumed correct and petitioner must prove it wrong in order to prevail see rule a 290_us_111 see also 308_us_488 stating that deductions are a matter of legislative grace to which taxpayers must prove their entitlement while sec_7491 may place the burden_of_proof upon the commissioner in certain circumstances petitioner conceded at trial that petitioner has the burden_of_proof ii noncash contribution a taxpayer is generally allowed a deduction for any charitable_contribution made during the taxable_year sec_170 a charitable_contribution includes a gift of property to a charitable_organization made with charitable intent and without the receipt or expectation of receipt of adequate_consideration see 490_us_680 477_us_105 see also sec_1_170a-1 and income_tax regs while a taxpayer is generally not allowed a charitable 9petitioner’s opening brief is consistent with petitioner’s concession in that the brief does not reference sec_7491 contribution deduction for a gift of property consisting of less than an entire_interest in that property an exception is made for a qualified_conservation_contribution see sec_170 b iii a qualified_conservation_contribution is a contribution of a qualified_real_property_interest to a qualified_organization which is made exclusively for conservation purposes sec_170 see also sec_1_170a-14 income_tax regs we focus on the third requirement ie whether llc’s contribution of the donated property was exclusively for conservation purposes a contribution is made exclusively for conservation purposes only if it meets the requirements of sec_170 and 124_tc_258 affd 471_f3d_698 6th cir we begin our analysis with the requirements of sec_170 a sec_170 sec_170 provides that a contribution shall not be treated as exclusively for conservation purposes unless the conservation_purpose is protected in perpetuity the parties disagree on whether the conservation_purpose of the donated property is protected in perpetuity respondent argues that the donated property is not protected in perpetuity by virtue of first republic bank’s mortgage on the subject property petitioner argues that the conservation_purpose of the donated property is protected in perpetuity because first republic bank subordinated its interest in the subject property to nat’s right to enforce the terms of the easement the perpetuity requirement of sec_170 has its origins in the tax reduction and simplification act of trsa publaw_95_30 sec a stat dollar_figure in trsa sec congress temporarily allowed a charitable_contribution_deduction for an easement with respect to real_property granted in perpetuity to a governmental_unit or qualifying charitable_organization exclusively for conservation purposes the conference_report on trsa explained while it is intended that the term conservation purposes be liberally construed with regard to the types of property with respect to which deductible conservation easements may be granted it is also intended that contributions of perpetual easements qualify for the deduction only in situations where the conservation purposes of protecting or preserving the property will in practice be carried out thus it is intended that a contribution of a conservation_easement qualify for a deduction only if the holding of the easement is related to the purpose or function constituting the donee’s purpose for exemption organizations such as nature 10the tax reform act of publaw_94_455 sec e 90_stat_1919 authorized a deduction for the donation of an easement with respect to real_property of not less than years’ duration granted to a governmental_unit or qualifying charitable_organization made exclusively for conservation purposes see 124_tc_258 examining the legislative_history of the requirement that a qualified_contribution of a conservation_easement be exclusively for conservation purposes affd 471_f3d_698 6th cir congress however did not amend sec_170 to require that the easement be granted in perpetuity until trsa conservancies environmental and historic trusts state and local governments etc and the donee is able to enforce its rights as holder of the easement and protect the conservation purposes which the contribution is intended to advance the requirement that the contribution be exclusively for conservation purposes is also intended to limit deductible contributions to those transfers which require that the donee hold the easement exclusively for conservation purposes ie that they not be transferable by the donee in exchange for money other_property or services h conf rept pincite- 1977_1_cb_519 congress again drew attention to the protection of a contributed conservation_easement in the act of date act publaw_96_541 sec a 94_stat_3206 which extended permanently the deduction for a charitable_contribution of a qualified conservation easementdollar_figure the senate report accompanying the enactment stated the bill retains the present law requirement that contributions be made exclusively for conservation purposes moreover the bill explicitly provides that this requirement is not satisfied unless the conservation_purpose is protected in perpetuity the contribution must involve legally enforceable restrictions on the interest in the property retained by the donor that would prevent uses of the retained_interest inconsistent with the conservation purposes 11as amended in the provisions of former sec_170 excepting from the partial interest limitation a taxpayer’s contribution of a qualified_conservation_easement did not apply to contributions made after date trsa sec b 91_stat_154 in the act sec c 94_stat_3207 congress effectively made permanent the deduction for such a contribution by requiring that the conservation_purpose be protected in perpetuity the committee intends that the perpetual restrictions must be enforceable by the donee organization and successors in interest against all other parties_in_interest including successors in interest the requirement that the conservation_purpose be protected in perpetuity also is intended to limit deductible contributions to those transfers which require that the donee or successor_in_interest hold the conservation_easement or other restriction or other_property interests exclusively for conservation purposes ie that they not be transferable by the donee except to other qualified organizations that also will hold the perpetual restriction or property exclusively for conservation purposes s rept pincite 1980_2_cb_599 the secretary published final regulations interpreting sec_170 on date t d 1986_1_cb_89 these regulations in relevant part interpret sec_170 as follows sec_1_170a-14 qualified conservation contributions g enforceable in perpetuity-- in general --in the case of any donation under this section any interest in the property retained by the donor and the donor’s successors in interest must be subject_to legally enforceable restrictions for example by recordation in the land records of the jurisdiction in which the property is located that will prevent uses of the retained_interest inconsistent with the conservation purposes of the donation protection of a conservation_purpose in case of donation of property subject_to a mortgage --in the case of conservation contributions made after date no deduction will be permitted under this section for an interest in property which is subject_to a mortgage unless the mortgagee subordinates its rights in the property to the right of the qualified_organization to enforce the conservation purposes of the gift in perpetuity for conservation contributions made prior to date the requirement of sec_170 is satisfied in the case of mortgaged property with respect to which the mortgagee has not subordinated its rights only if the donor can demonstrate that the conservation_purpose is protected in perpetuity without subordination of the mortgagee’s rights remote future event --a deduction shall not be disallowed under this section merely because the interest which passes to or is vested in the donee organization may be defeated by the performance of some act or the happening of some event if on the date of the gift it appears that the possibility that such act or event will occur is so remote as to be negligible see paragraph e of sec_1_170a-1 for example a state’s statutory requirement that use restrictions must be rerecorded every years to remain enforceable shall not by itself render an easement nonperpetual extinguishment -- i in general --if a subsequent unexpected change in the conditions surrounding the property that is the subject of a donation under this paragraph can make impossible or impractical the continued use of the property for conservation purposes the conservation_purpose can nonetheless be treated as protected in perpetuity if the restrictions are extinguished by judicial proceeding and all of the donee’s proceeds determined under paragraph g ii of this section from a subsequent sale_or_exchange of the property are used by the donee organization in a manner consistent with the conservation_purpose of the original contribution ii proceeds --in case of a donation made after date for a deduction to be allowed under this section at the time of the gift the donor must agree that the donation of the perpetual conservation restriction gives rise to a property right immediately vested in the donee organization with a fair_market_value that is at least equal to the proportionate value that the perpetual conservation restriction at the time of the gift bears to the value of the property as a whole at that time for purposes of this paragraph g ii that proportionate value of the donee’s property rights shall remain constant accordingly when a change in conditions gives rise to the extinguishment of a perpetual conservation restriction under paragraph g i of this section the donee organization on a subsequent sale exchange or involuntary_conversion of the subject property must be entitled to a portion of the proceeds at least equal to that proportionate value of the perpetual conservation restriction unless state law provides that the donor is entitled to the full proceeds from the conversion without regard to the terms of the prior perpetual conservation restriction with our understanding of the origins of sec_170 and its relevant legislative_history and regulatory interpretation in mind we now return to the question of whether the donated property was protected in perpetuity respondent argues that the conservation_purpose of the donated property is not protected in perpetuity because nat was not guaranteed a proportionate share of proceeds in the event of a casualty or condemnation before the mortgage held by first republic bank was satisfieddollar_figure petitioner argues that the terms of the deed of easement and new york law guarantee nat’s right to receive a proportionate share of future proceeds in the event of a casualty or condemnation and that sec_1_170a-14 income_tax regs is therefore satisfied we agree with respondent we recently decided whether taxpayers were entitled to a deduction for the claimed charitable_contribution of an easement 12respondent does not assert that llc failed to meet the subordination requirement of sec_1_170a-14 income_tax regs under similar facts in 134_tc_182 kaufman i in kaufman i the taxpayers contributed to a donee organization a facade easement on a single-family rowhouse which they owned in a historic preservation district in boston at the time of contribution the property was subject_to a mortgage which entitled the mortgagee to a prior claim to all proceeds of condemnation and to all insurance proceeds resulting from any casualty of the property the taxpayers claimed a charitable_contribution_deduction equal to the value they assigned to the facade easement and the commissioner disallowed that deduction in kaufman i the commissioner moved for summary_judgment and we granted that motion insofar as it related to the deductibility of the contribution of the easement we held as a matter of law that the facade easement was not protected in perpetuity because the donee organization was not guaranteed a proportionate share of proceeds in the event of casualty or condemnation as required by sec_1_170a-14 income_tax regs we noted that the taxpayers could not avoid the unconditional requirement that the donee organization must be entitled to its proportionate share of future proceeds by showing that they would most likely be able to satisfy their mortgage and their obligations to the donee organizationdollar_figure we believe our opinion in kaufman i to be squarely on point as in kaufman i the lender agreement here is clear that first republic bank retained a prior claim to all condemnation and insurance proceeds in preference to nat until that mortgage was satisfied and discharged thus at any point before the mortgage was repaid the possibility existed for first republic bank to deprive nat of value that should have otherwise been dedicated to the conservation_purpose such would be the case for example if the servient property was substantially or completely destroyed and no significant value remained in that property after the mortgage was satisfied under such circumstances the right of nat to a proportionate share of the future proceeds of a condemnation or casualty would not be guaranteed llc’s contribution of the donated property thus fails to comply with the enforceability in perpetuity requirements of sec_1_170a-14 income_tax regs we find that llc’s contribution was not protected in perpetuity and therefore not a qualified_conservation_contribution under sec_170 petitioner argues that notwithstanding the mortgage on the property the conservation_purpose of the donated property is 13the taxpayers moved the court to reconsider our grant of partial summary_judgment a motion which we denied in kaufman v commissioner t c __ kaufman ii also protected in perpetuity under new york law petitioner relies on n y real prop acts law sec mckinney which petitioner believes requires that nat be compensated before the easement may be extinguished we are not persuaded n y real prop acts law sec authorizes a new york court to extinguish an easement where the easement is of no actual and substantial benefit to the persons seeking its enforcement or seeking a declaration or determination of its enforceability because by reason of changed conditions or other cause its purpose is not capable of accomplishment or for any other reason that section further provides that an easement adjudged unenforceable shall be completely extinguished upon payment of damages if any which the person entitled to enforce the easement would sustain from the extinguishment of that easement petitioner argues that llc has satisfied the requirement of sec_1_170a-14 income_tax regs because a new york court may adjudge the facade easement unenforceable entitling the beneficiary of the easement to compensation see n y real prop acts law sec but as we have discussed above and in kaufman i and ii sec_1_170a-14 income_tax regs requires that nat must be entitled to its proportionate share of proceeds in the event the easement is extinguished petitioner cannot avoid the unconditional requirement of sec_1_170a-14 income_tax regs by showing that a new york court might adjudge the facade easement unenforceable especially where as here petitioner has not established that nat would sustain or recover actual damages in the event of extinguishment b sec_170 we are also not convinced that the donated property satisfies the requirements of sec_170 under sec_170 a contribution is for a conservation_purpose if it preserves a historically important land area or a certified_historic_structure see glass v commissioner t c pincite- see also sec_1_170a-14 income_tax regs a certified_historic_structure includes a building which is in a registered_historic_district and is certified by the secretary of the interior as being of historic significance to the district sec_1_170a-14 income_tax regs the subject property is a certified_historic_structure because it is within the metropolitan museum historic_district and was certified as such by the u s department of the interior national park service petitioner’s entitlement to a deduction for a contribution of the donated property therefore depends on whether the transfer of the donated property in fact preserved the subject property see herman v commissioner tcmemo_2009_205 by virtue of its location in the metropolitan museum historic_district new york city law makes it unlawful for llc to alter the subject property unless lpc approves that alteration n y city admin code sec a in determining whether to allow such an alteration the lpc must consider whether the alteration would change destroy or affect any exterior architectural feature of the subject property and in the case of an improvement whether such construction would affect or not be in harmony with the external appearance of other neighboring improvements id sec a this determination would of course consider not only the external appearance of the subject property’s facade but also the ability of llc to alter the aesthetics of the subject property by building above it thus it is local law and the rules of the lpc that preserve the subject property and not the rights which nat possessed under the deed of easement see herman v commissioner supra while petitioner argues that nat’s enforcement of the deed of easement affords additional meaningful protection not already guaranteed by the lpc’s enforcement of local law petitioner has failed to persuade us that such is the case c conclusion we hold that llc’s contribution of the donated property does not comply with the requirements of sec_170 and accordingly llc’s contribution of the donated property was not made exclusively for conservation purposes see sec_170 and llc is not entitled to its claimed noncash charitable_contribution_deduction under sec_170dollar_figure iii accuracy-related_penalty respondent determined that a 20-percent accuracy-related_penalty under sec_6662 applies to any underpayment_of_tax attributable to the dollar_figure disallowance respondent determined that the accuracy-related_penalty was appropriate because of negligence or disregard of rules or regulations or alternatively because of a substantial_understatement_of_income_tax see sec_6662 and c d respondent bears the burden of production on the applicability of this accuracy- related penalty in that he must come forward with sufficient evidence indicating that it is proper to impose it see sec 14respondent also determined that llc did not properly substantiate its claimed deduction for the noncash contribution because none of the haims appraisals were qualified appraisals within the meaning of sec_170 and sec_1 170a- c income_tax regs to that end respondent states that the appraisal was prepared more than days before the date of contribution the and appraisals did not value the donated property as of the date of the contribution and the appraisal was obtained long after the due_date including extensions of the return on which the deduction was claimed we agree with this determination sec_170 requires that a qualified_appraisal be attached to the tax_return reporting a noncash contribution of more than dollar_figure and llc did not meet this requirement for the reasons stated by respondent as to this issue we add that the appraisals also failed to be qualified appraisals for the reasons set forth in scheidelman v commissioner tcmemo_2010_151 whereas petitioner relies upon the doctrine_of substantial compliance to offset petitioner’s noncompliance with any applicable_requirement for characterizing an appraisal as a qualified_appraisal we do not do so see id c see also 116_tc_438 once respondent meets this burden the burden_of_proof remains with petitioner including the burden of proving that the penalty is inappropriate because of reasonable_cause see higbee v commissioner supra pincite the facts of this case lead us to conclude that respondent has met his burden of production with respect to the accuracy-related_penalty petitioner argues that the accuracy-related_penalty does not apply because llc meets the reasonable_cause defense of sec_6664 pursuant to that section the 20-percent accuracy- related penalty of sec_6662 does not apply to any portion of an underpayment for which petitioner establishes that llc through mr asser had reasonable_cause and acted in good faithdollar_figure whether mr asser acted with reasonable_cause and in good_faith turns on the extent to which he in the light of his experience knowledge and education tried to assess the proper tax treatment of the contribution of the donated property see sec_1_6664-4 income_tax regs reasonable_cause may exist where a position taken on a return involves an issue that was novel at the time the return was filed see bunney v 15we determine the application of this defense in this partnership-level proceeding because petitioner claims that the defense applies on account of the actions of mr asser as llc’s managing member and tax_matters_partner see 131_tc_112 vacated and remanded on another issue 615_f3d_321 5th cir tigers eye trading llc v commissioner tcmemo_2009_121 see also sec_301_6221-1 proced admin regs commissioner 114_tc_259 110_tc_110 cf 251_f3d_862 9th cir where a case is one ‘of first impression with no clear authority to guide the decision makers as to the major and complex issues ’ a negligence_penalty is inappropriate quoting 756_f2d_1430 9th cir affg in part and vacating as to an addition_to_tax for negligence 80_tc_34 we agree with petitioner that mr asser made a reasonable attempt to comply with the internal_revenue_code and that he acted in good_faith we understand that kaufman i is the first time that a court has considered the effect of a mortgage on a contribution of an easement claimed to be a qualified_conservation_contribution that interpretation of the relevant regulation was not published until more than years after mr asser filed the return we do not believe that the regulations interpreting the perpetuity requirement of sec_170 are so crystal clear and unambiguous as to make the imposition of the accuracy-related_penalty appropriate we also find that mr asser acted in good_faith by securing three separate appraisals of the donated property and disclosing the contribution of that property on llc’s return see 135_tc_471 accordingly in the light of all of the facts and circumstances we find that mr asser acted reasonably and in good_faith and hold that llc is not liable for an accuracy-related_penalty under sec_6662 iv conclusion we have considered all arguments made by petitioner for a contrary holding as to the deficiency and we have considered all arguments made by respondent for a contrary holding as to the accuracy-related_penalty to the extent that we have not discussed those arguments above we have rejected them as moot irrelevant or without merit decision will be entered for respondent as to the deficiency and for petitioner as to the accuracy-related_penalty


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division dec u u l uniform issue list legend taxpayer a financial_institution b financial_institution c ira x account y amount dear this letter is in response to a request for a letter_ruling dated date as supplemented by additional correspondence dated date from your authorized representative in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer a age represents that she received a distribution from ira x totaling amount taxpayer a asserts that her failure to accomplish a rollover within the 60-day period prescribed by sec_408 was due to miscommunication or misunderstanding with financial_institution c which led to amount being placed into a non-ira account taxpayer a further represents that amount has not been used for any other purpose taxpayer a maintained ira x an individual_retirement_account ira under code sec_408 with financial_institution b the assets of ira x were invested in certificates of deposit cd seeking more favorable interest rates in ge taxpayer a represents that she contacted financial_institution b with the intention of withdrawing the funds in ira x and depositing the proceeds into an ira with financial_institution c on j taxpayer a was issued a check in the amount of amount which represented the proceeds of ira x on rr taxpayer a opened account y a non-ira account with financial_institution c and deposited amount into account y taxpayer a represents that she believed the deposit of amount into account y completed a valid rollover although taxpayer a did not discuss iras with the employee of financial_institution c the check stub indicated the taxpayer a became aware of the mistake in an during the preparation of her proceeds were from an ira tax_return based on the above facts and representations with respect to the distribution of amount you request a ruling that the internal_revenue_service waive the day rollover requirement contained in sec_408 of the code sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if ' i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in section d a i from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the secretary may waive the day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 2003_4_irb_359 date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and documentation submitted by taxpayer a is consistent with her assertion that her failure to accomplish a timely rollover was due to miscommunication or misunderstanding with financial_institution c therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount from ira x taxpayer a is granted a period of days from the issuance of this ruling letter to contribute amount into a rollover ira provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to such contribution amount will be considered a rollover_contribution within the meaning of sec_408 of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter_ruling has been sent to your authorized representative pursuant to a power_of_attorney on file in this office this ruling please contact correspondence to please address all if you wish to inquire about at sincerely yours carll fh watkins carlton a watkins manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose notice cc