Court Opinion

ID: 4339717
Source: CourtListenerOpinion
Date Created: 2018-11-14 07:49:35.882075+00
Date Added: 2024-06-11T07:49:39.677429
License: Public Domain

PATRICK J. WACHTER AND LOUISE M. WACHTER, PETITIONERS
                                        v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
                                      MICHAEL E. WACHTER AND KELLY A. WACHTER, PETITIONERS
                                        v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
                                               Docket Nos. 9213–11, 9219–11.                          Filed March 11, 2014.

                                                  For 2004 through 2006 Ps reported charitable contributions
                                               that flowed to them from a partnership and an LLC, both of
                                               which were treated as partnerships for tax purposes. For each
                                               year the LLC reported charitable contributions of cash and
                                               the partnership reported bargain sales of conservation ease-
                                               ments as charitable contributions of property. R issued notices
                                               of deficiency to Ps disallowing all of the charitable contribu-
                                               tion deductions and determining accuracy-related penalties. R
                                               filed a motion for partial summary judgment asserting that Ps
                                               did not satisfy the ‘‘contemporaneous written acknowledg-
                                               ment’’ requirement for the cash contributions. For the prop-
                                               erty contributions, respondent asserted that the easements
                                               were not granted in perpetuity as a result of a North Dakota
                                               State law that limits the duration of a real property ease-
                                               ment. Held: North Dakota State law limits the duration of an
                                               easement to not more than 99 years, thus precluding a North
                                               Dakota conservation easement from qualifying as granted ‘‘in
                                               perpetuity’’ under I.R.C. sec. 170(h)(2)(C) and (5)(A). Held,
                                               further, material facts remain in dispute regarding whether
                                               Ps satisfied the ‘‘contemporaneous written acknowledgment’’
                                               requirement of I.R.C. sec. 170(f )(8) and sec. 1.170A–13(f )(15),
                                               Income Tax Regs., and thus summary judgment is not appro-
                                               priate on this issue.

                                           Jon J. Jensen, for petitioners.
                                           David L. Zoss and Christina L. Cook, for respondent.
                                        BUCH, Judge: These cases are before the Court on respond-
                                     ent’s motion for partial summary judgment. The issues for
                                     decision are:
                                        (1) whether a State law that limits the duration of an ease-
                                     ment to not more than 99 years precludes petitioners’ con-
                                     servation easements from qualifying as granted ‘‘in per-
                                     petuity’’ under section 170(h)(2)(C) or (5)(A). 1 We hold that
                                     it does; and
                                       1 Unless otherwise indicated, all section references are to the Internal

                                     Revenue Code (Code) in effect for the years in issue, and all Rule ref-
                                     erences are to the Tax Court Rules of Practice and Procedure.

                                     140

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                                     (140)                         WACHTER v. COMMISSIONER                                        141

                                       (2) whether the documents petitioners provided to the IRS
                                     satisfy the ‘‘contemporaneous written acknowledgment’’
                                     requirement of section 170(f)(8) and section 1.170A–13(f)(15),
                                     Income Tax Regs. We hold that material facts remain in dis-
                                     pute and thus summary judgment is not appropriate for this
                                     issue.

                                                                          FINDINGS OF FACT

                                       The transactions at issue involve members of the Wachter
                                     family and entities that they controlled. Michael and Kelly
                                     Wachter filed joint income tax returns for all the years in
                                     issue: 2004 through 2006. The same is true for Patrick and
                                     Louise Wachter. During the years in issue, Michael, Patrick,
                                     and Louise each held varying interests in two entities: WW
                                     Ranch, a partnership, and Wind River Properties LLC (Wind
                                     River), a limited liability company that is treated as a part-
                                     nership for tax purposes. Wind River at times operated
                                     under the name Windsor Storage. For convenience, we will
                                     refer to petitioners individually by their given names or to
                                     Michael, Patrick, and Louise (as owners of WW Ranch and
                                     Wind River) collectively as the Wachters.
                                     Farm and Ranch Lands Protection Program
                                       Section 2503 of the Farm Security and Rural Investment
                                     Act of 2002, Pub. L. No. 107–171, 116 Stat. at 267, author-
                                     ized the Secretary of Agriculture to purchase conservation
                                     easements in order to protect topsoil by limiting non-
                                     agricultural uses of certain lands and authorized funding for
                                     such purchases. The United States, acting through the Com-
                                     modity Credit Corporation (CCC), entered into cooperative
                                     agreements in order to implement the Farm and Ranch
                                     Lands Protection Program and used the Natural Resources
                                     Conservation Service (NRCS) of the Department of Agri-
                                     culture to administer the program. The parties provided to
                                     the Court a copy of a 2003 cooperative agreement between
                                     the CCC and the American Foundation for Wildlife (AFW)
                                     with an attachment referencing land owned by WW Ranch.
                                     The cooperative agreement listed the requirements for such
                                     an easement, including that the easement ‘‘[r]un with the
                                     land in perpetuity or a minimum of thirty years, where State
                                     law prohibits a permanent easement.’’ As a part of the

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                                     142                    142 UNITED STATES TAX COURT REPORTS                                          (140)

                                     cooperative agreement, the NRCS listed its prerequisites for
                                     easement purchases before the Federal Government would
                                     release the Federal funds to reimburse AFW for up to 50%
                                     of the easement purchase price. The cooperative agreement
                                     included a provision whereby a landowner could donate up to
                                     25% of the appraised fair market value of the easement and
                                     that such a donation may be considered as part of AFW’s
                                     contribution to the purchase price. However, in order for the
                                     landowner’s donation to be considered part of AFW’s con-
                                     tribution, AFW was required to get a current appraisal of the
                                     contribution. In the event the landowner made such a dona-
                                     tion, NRCS required a copy of the landowner’s IRS Form
                                     8283, Noncash Charitable Contributions, before the NRCS
                                     would release the federal funds.
                                     Cash Contributions
                                       On its returns for the years in issue, Wind River reported
                                     the following cash charitable contributions, which it allocated
                                     amongst its members:
                                                        2004 ............................................................   $170,000
                                                        2005 ............................................................    171,150
                                                        2006 ............................................................    144,500

                                       On behalf of Wind River, Michael and Patrick signed an
                                     agreement dated February 26, 2004, with North Dakota Nat-
                                     ural Resource Trust (NRT) agreeing to donate $170,000 by
                                     March 1, 2004. Michael signed a check dated February 26,
                                     2004, from Windsor Storage payable to NRT for $170,000.
                                     NRT provided a letter dated March 23, 2004, to Michael and
                                     Patrick ‘‘dba WW Ranch’’ acknowledging the cash gift and
                                     stating that NRT provided no goods or services in exchange
                                     for the donation.
                                       Michael signed a check dated March 23, 2005, from
                                     Windsor Storage payable to NRT for $171,150. The Wachters
                                     provided the IRS with a letter from NRT dated March 21,
                                     2005, to Windsor Storage acknowledging the cash gift and
                                     stating that NRT provided no goods or services in exchange
                                     for the donation. The only copy of this letter in the record is
                                     unsigned.
                                       Someone prepared a check dated May 9, 2006, from
                                     Windsor Storage payable to NRT for $144,500. The only copy
                                     of this check in the record is unsigned, but the parties do not

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                                     (140)                             WACHTER v. COMMISSIONER                                             143

                                     appear to dispute that the payment was made. NRT provided
                                     a letter dated May 10, 2006, to Windsor Storage acknowl-
                                     edging the cash gift and stating that NRT provided no goods
                                     or services in exchange for the donation.
                                     Bargain Sale Charitable Contributions
                                       On its partnership returns for the years in issue, WW
                                     Ranch reported bargain sales of conservation easements as
                                     charitable contributions as follows:
                                                        2004 ............................................................   $349,000
                                                        2005 ............................................................    247,550
                                                        2006 ............................................................    162,500

                                       For each year, the parties to the transaction obtained two
                                     appraisals of the property that was to be contributed. Each
                                     appraisal valued the property according to a different land
                                     use, and the Wachters used the difference in appraised
                                     values to determine the value of the conservation easement
                                     and thus the amounts of their charitable contributions.
                                       NRT obtained an appraisal of WW Ranch’s sections 5 and
                                     6 parcel 2 as of April 30, 2003, determining a value of
                                     $31,000 for use as agricultural property. A second appraisal
                                     dated May 14, 2003, was prepared for the sections 5 and 6
                                     parcel, determining a value of $1,400,000 for use as ‘‘rural
                                     residential sites’’. On March 8, 2004, WW Ranch sold a con-
                                     servation easement on its sections 5 and 6 parcel to AFW for
                                     $1,020,000 (of which $170,000 was supplied by NRT). The
                                     Wachters subtracted the sale price of $1,020,000 from the
                                     difference in value of the two appraisals of $1,369,000 to
                                     arrive at their charitable contribution deduction of $349,000.
                                       NRT obtained two appraisals of WW Ranch’s section 8
                                     parcel as of February 21, 2005, one for use as agricultural
                                     property determining a value of $10,000 and one for ‘‘full
                                     developmental value’’ determining a value of $915,000. On
                                     March 24, 2005, WW Ranch sold a conservation easement on
                                     the section 8 parcel to AFW for $657,450 (of which $171,150
                                     was supplied by NRT). The Wachters subtracted the sale
                                           2 Each
                                                parcel at issue is located in one or more sections of Township 140
                                     North, Range 81 West of Morton County, North Dakota. The parties refer
                                     to the properties at issue as the ‘‘sections 5 and 6 parcel’’, the ‘‘section 8
                                     parcel’’, and the ‘‘sections 16 and 18 parcels’’, and we adopt their termi-
                                     nology.

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                                     144                 142 UNITED STATES TAX COURT REPORTS                                    (140)

                                     price of $657,450 from the difference in value of the two
                                     appraisals of $905,000 to arrive at their charitable contribu-
                                     tion deduction of $247,550.
                                        NRT obtained two appraisals of WW Ranch’s sections 16
                                     and 18 parcels as of August 25, 2005, one subject to a pro-
                                     posed conservation easement determining a value of $46,000
                                     and one for rural residential development determining a
                                     value of $696,000. On May 11, 2006, WW Ranch sold a con-
                                     servation easement on its section 16 and 18 parcels to AFW
                                     for $487,500 (of which $144,500 was supplied by NRT). The
                                     Wachters subtracted the sale price of $487,500 from the dif-
                                     ference in value of the two appraisals of $650,000 to arrive
                                     at their charitable contribution deduction of $162,500.
                                     Individual Reporting
                                       Patrick and Louise reported charitable contributions on
                                     their joint Federal income tax returns as follows:
                                                  2004                 Cash—Wind River                              $85,000
                                                                       Noncash—WW Ranch                             174,500
                                                  2005                 Cash                                          85,575
                                                                       Noncash                                      123,775
                                                  2006                 Cash                                          72,250
                                                                       Noncash                                       81,250

                                       Michael and Kelly reported charitable contributions on
                                     their joint Federal income tax returns as follows:
                                                  2004                 Cash—Wind River                              $85,000
                                                                       Noncash—WW Ranch                             174,500
                                                  2005                 Cash                                          85,575
                                                                       Noncash                                      123,775
                                                  2006                 Cash                                          72,250
                                                                       Noncash                                       81,250

                                        On April 8, 2011, respondent issued notices of deficiency to
                                     both couples disallowing the charitable contribution deduc-
                                     tions related to WW Ranch and Wind River and determining
                                     accuracy-related penalties under section 6662. Each couple
                                     timely filed a petition disputing their notice of deficiency,
                                     and the Court consolidated the cases for trial, briefing, and
                                     opinion. Respondent filed a motion for partial summary judg-
                                     ment and a memorandum of facts and law in support of his
                                     motion for partial summary judgment, the Wachters filed a
                                     response, and respondent filed a reply.

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                                     (140)                         WACHTER v. COMMISSIONER                                        145

                                                                                  OPINION

                                        Either party may move for summary judgment regarding
                                     all or any part of the legal issues in controversy. See Rule
                                     121(a). We may grant summary judgment only if there are
                                     no genuine disputes of fact. See Rule 121(b); Naftel v.
                                     Commissioner, 85 T.C. 527, 529 (1985). Respondent, as the
                                     moving party, bears the burden of proving that no genuine
                                     dispute exists as to any material fact and that respondent is
                                     entitled to judgment as a matter of law. See Sundstrand
                                     Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff ’d, 17
F.3d 965 (7th Cir. 1994). In deciding whether to grant sum-
                                     mary judgment, the factual materials and the inferences
                                     drawn from them must be considered in the light most favor-
                                     able to the nonmoving party. See FPL Grp., Inc. v. Commis-
                                     sioner, 115 T.C. 554, 559 (2000); Bond v. Commissioner, 100
T.C. 32, 36 (1993); Naftel v. Commissioner, 85 T.C. 529.
                                     When a motion for summary judgment is made and properly
                                     supported, the nonmoving party may not rest on mere allega-
                                     tions or denials but must set forth specific facts showing that
                                     there is a genuine dispute for trial. See Celotex Corp. v.
                                     Catrett, 477 U.S. 317, 324 (1986); Sundstrand Corp. v.
                                     Commissioner, 98 T.C. 520; see also Rule 121(d).
                                     Respondent filed the motion for partial summary judgment;
                                     therefore we construe all factual disputes and draw all
                                     inferences in favor of the Wachters.
                                        A deduction is allowed for any charitable contribution for
                                     which payment is made within the taxable year if the con-
                                     tribution is verified under regulations prescribed by the Sec-
                                     retary. Sec. 170(a)(1). The Wachters claimed charitable con-
                                     tribution deductions for both cash and noncash contributions
                                     for each year. We discuss each in turn.
                                     Noncash Contributions
                                        Generally, a charitable contribution deduction is not
                                     allowed for a charitable gift of property consisting of less
                                     than the donor’s entire interest in that property. Sec.
                                     170(f)(3)(A). However, there is an exception for a ‘‘qualified
                                     conservation contribution.’’ Sec. 170(f)(3)(B)(iii). A contribu-
                                     tion of real property is a qualified conservation contribution
                                     if (1) the real property is a ‘‘qualified real property interest’’,
                                     (2) the contributee is a ‘‘qualified organization’’, and (3) the

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                                     146                 142 UNITED STATES TAX COURT REPORTS                                    (140)

                                     contribution is ‘‘exclusively for conservation purposes.’’ Sec.
                                     170(h)(1); see also sec. 1.170A–14(a), Income Tax Regs. For
                                     the purposes of the motion for partial summary judgment,
                                     respondent argues that the State law restricting easements
                                     to 99 years prevents the conservation easements from being
                                     qualified real property interests and prevents the conserva-
                                     tion easements from being exclusively for conservation pur-
                                     poses.
                                           North Dakota Law
                                        We look to State law to determine the nature of property
                                     rights, whereas Federal law determines the appropriate tax
                                     treatment of those rights. United States v. Nat’l Bank of
                                     Commerce, 472 U.S. 713, 722 (1985); see also 61 York
                                     Acquisition, LLC v. Commissioner, T.C. Memo. 2013–266, at
                                     *8.
                                        Beginning in 1915, the United States signed several trea-
                                     ties agreeing to protect migratory birds and their habitats.
                                     See North Dakota v. United States, 460 U.S. 300, 309–310
                                     n.12 (1983), aff ’g 650 F.2d 911 (8th Cir. 1981). Between 1931
                                     and 1977 the United States acquired easements covering
                                     nearly 1 million acres of land in North Dakota for use as
                                     migratory bird refuges. Id. at 304–305. However, cooperation
                                     between the Federal Government and the State of North
                                     Dakota broke down such that in 1977 the State enacted a
                                     law, which it amended in 1979 and 1981, (1) requiring
                                     approval for all wetland acquisitions first by the board of
                                     county commissioners and only then by the governor, (2)
                                     allowing the landowner to negotiate the terms of the ease-
                                     ment and ‘‘‘drain any after-expanded wetland or water area
                                     in excess of the legal description’’’, and (3) restricting all
                                     easements to a maximum of 99 years. Id. at 306–308 & n.8
                                     (quoting N.D. Cent. Code sec. 20.1–02–18.2 (1981)).
                                        The United States brought a declaratory judgment action
                                     in the U.S. District Court for the District of North Dakota,
                                     seeking judgment that, inter alia, the State law was hostile
                                     to Federal law in certain respects and could not be applied.
                                     Id. at 309. The District Court granted the United States
                                     summary judgment, and the United States Court of Appeals
                                     for the Eighth Circuit affirmed. Id. The Supreme Court
                                     determined that because of the migratory bird treaties and
                                     the ‘‘ ‘certainty and finality’ that we have regarded as ‘critical

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                                     (140)                          WACHTER v. COMMISSIONER                                        147

                                     when * * * federal officials carrying out the mandate of Con-
                                     gress irrevocably commit scarce funds’ ’’, the North Dakota
                                     statute was hostile to Federal interests and may not be
                                     applied to the easements for which the Federal Government
                                     had already received consent. Id. at 320 (quoting United
                                     States v. Little Lake Misere, 412 U.S. 580, 596 (1973)).
                                       The Supreme Court in North Dakota v. United States
                                     invalidated the 99-year restriction only insofar as it related
                                     to easements on wetlands for which the Federal Government
                                     had already received consent. The Supreme Court did not
                                     invalidate the 99-year restriction in all situations in which
                                     the Federal Government is a party, directly or indirectly, to
                                     an easement purchase.
                                       For the years in issue, N.D. Cent. Code sec. 47–05–02.1
                                     (1999 & Supp. 2013) provided in pertinent part:
                                           Real property easements * * * which become binding after July 1, 1977,
                                           shall be subject to the requirements of this section. These requirements
                                           are deemed a part of any agreement for such interests in real property
                                           whether or not printed in a document of agreement.

                                                                  *   *    *   *    *   *   *
                                           2. The duration of the easement * * * on the use of real property must
                                           be specifically set out, and in no case may the duration of any interest
                                           in real property regulated by this section exceed ninety-nine years. * * *

                                        Both parties allege that the State law at issue here is
                                     unique because this is the only State that has a law that pro-
                                     vides for a maximum duration that may not be overcome by
                                     agreement. The parties agree that, by operation of State law,
                                     the easements at issue will expire 99 years after they were
                                     conveyed. The parties do not draw a distinction where the
                                     donee of the easement is the Federal Government or an
                                     entity acting on behalf of the Federal Government. Nor do we
                                     see a distinction.
                                        Respondent asserts that the State law restriction prevents
                                     the easements from being granted in perpetuity, which in
                                     turn prevents them from being both qualified real property
                                     interests under section 170(h)(2) and contributions exclu-
                                     sively for conservation purposes under section 170(h)(5). Peti-
                                     tioners, however, assert that the 99-year limitation should be
                                     considered the equivalent of a remote future event or the
                                     retention of a negligible interest because at present the
                                     remainder is ‘‘essentially valueless.’’ There are two separate

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                                     148                  142 UNITED STATES TAX COURT REPORTS                                    (140)

                                     and distinct perpetuity requirements, and the failure to sat-
                                     isfy either of them will prevent the easements from being
                                     qualified conservation contributions. See Belk v. Commis-
                                     sioner, 140 T.C. 1, 12 (2013).
                                           Qualified Real Property Interest
                                       Under section 170(h)(2)(C), a qualified real property
                                     interest means ‘‘a restriction (granted in perpetuity) on the
                                     use which may be made of the real property.’’ The Wachters
                                     assert that the possibility that the land would revert back to
                                     them, WW Ranch, or their successors in interest is the
                                     equivalent of a remote future event that will not prevent the
                                     easements from being perpetual. Section 1.170A–14(g)(3),
                                     Income Tax Regs., provides:
                                             (3) Remote future event.—A deduction shall not be disallowed under
                                           section 170(f)(3)(B)(iii) and 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. * * *
                                         This Court has construed ‘‘so remote as to be negligible’’ as
                                     ‘‘ ‘a chance which persons generally would disregard as so
                                     highly improbable that it might be ignored with reasonable
                                     safety in undertaking a serious business transaction’ ’’, 885
                                     Inv. Co. v. Commissioner, 95 T.C. 156, 161 (1990) (quoting
                                     United States v. Dean, 224 F.2d 26, 29 (1st Cir. 1955)), or ‘‘ ‘a
                                     chance which every dictate of reason would justify an intel-
                                     ligent person in disregarding as so highly improbable and
                                     remote as to be lacking in reason and substance’ ’’, Graev v.
                                     Commissioner, 140 T.C. 377, 394 (2013) (quoting Briggs v.
                                     Commissioner, 72 T.C. 646, 657 (1979), aff ’d without pub-
                                     lished opinion, 665 F.2d 1051 (9th Cir. 1981)). ‘‘[A] conserva-
                                     tion easement fails to be ‘in perpetuity’ * * * if, on the date
                                     of the donation, the possibility that the charity may be
                                     divested of its interest in the easement is not so remote as
                                     to be negligible.’’ Id. at 393.
                                         ‘‘Remote’’ has various commonly accepted meanings. For
                                     example, remote can mean ‘‘far distant in space’’, ‘‘secluded’’,
                                     ‘‘distant in time’’, ‘‘distant in relationship’’, or ‘‘slight or faint;
                                     unlikely’’. Webster’s New Universal Unabridged Dictionary
                                     1630 (2d ed. 2003). As is relevant here, ‘‘remote’’ could refer
                                     to a temporal sense (distant, remote in time) or in a probable

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                                     (140)                          WACHTER v. COMMISSIONER                                        149

                                     sense (unlikely, a remote possibility). Id.; see also The Amer-
                                     ican Heritage Dictionary of the English Language 1476 (4th
                                     ed. 2000). Both the regulation and our caselaw focus on the
                                     term ‘‘remote’’ in terms of likelihood.
                                        As used in the regulation and as interpreted by our
                                     caselaw, the event is not remote. On the dates of the dona-
                                     tions it was not only possible, it was inevitable that AFW
                                     would be divested of its interests in the easements by oper-
                                     ation of North Dakota law. Therefore, the easements were
                                     not restrictions granted in perpetuity and were thus not
                                     qualified conservation contributions. 3 As a result, we will
                                     grant respondent’s motion for partial summary judgment
                                     insofar as the State law prevents a charitable contribution
                                     deduction for a conservation easement conveyed under the
                                     State law. 4
                                     Cash Contributions
                                       For any cash charitable contribution of $250 or more, the
                                     taxpayer must obtain a contemporaneous written acknowl-
                                     edgment from the donee. Sec. 170(f)(8)(A). Section 170(f)(8)(B)
                                     provides that the contemporaneous written acknowledgment
                                     must include the following:
                                              (B) CONTENT OF ACKNOWLEDGEMENT.—An acknowledgment meets the
                                           requirements of this subparagraph if it includes the following informa-
                                           tion:
                                                (i) The amount of cash and a description (but not value) of any prop-
                                              erty other than cash contributed.
                                                (ii) Whether the donee organization provided any goods or services
                                              in consideration, in whole or in part, for any property described in
                                              clause (i).
                                                (iii) A description and good faith estimate of the value of any goods
                                              or services referred to in clause (ii) or, if such goods or services consist
                                              solely of intangible religious benefits, a statement to that effect.

                                       3 We note that, in isolated situations, a long-term lease may be treated

                                     as the equivalent of a fee simple interest. See, e.g., secs. 1.1031(a)–1(c),
                                     1.1033(g)–1(b)(4), Income Tax Regs. But unlike section 170(h)(2)(C), those
                                     isolated situations address exchanges for ‘‘like’’ or ‘‘similar’’ property and
                                     do not involve an express statutory requirement that an interest be ‘‘in
                                     perpetuity’’.
                                       4 We express no opinion on petitioners’ argument that at present the re-

                                     mainder is essentially valueless; to do so would require that we resolve a
                                     question of fact regarding value.

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                                     150                  142 UNITED STATES TAX COURT REPORTS                                    (140)

                                        Section 170(f)(8)(C) provides that a written acknowledg-
                                     ment is contemporaneous when the taxpayer obtains it on or
                                     before the earlier of: (1) the date the taxpayer files a return
                                     for the taxable year of contribution or (2) the due date,
                                     including extensions, for filing that return.
                                        Respondent asserts that none of the letters the Wachters
                                     provided to the IRS constitutes a valid contemporaneous
                                     written acknowledgment. Respondent asserts (1) that none of
                                     the letters was addressed to Wind River, the entity that
                                     made the cash contributions, (2) NRT provided goods or serv-
                                     ices to the Wachters each year that were not mentioned in
                                     the letters, 5 and (3) the values of the goods or services were
                                     not mentioned in the letters. Further, respondent asserts the
                                     2005 letter fails to qualify as a contemporaneous written
                                     acknowledgment because the letter is unsigned and it pre-
                                     dates the check by two days. 6
                                        With respect to the assertion that the Wachters received
                                     some benefit that was not disclosed or valued in the letters,
                                     respondent has not proven on this record that the Wachters
                                     expected or received a benefit in exchange for their cash
                                     donations. If a taxpayer receives or expects to receive a ben-
                                     efit that is not disclosed in the contemporaneous written
                                     acknowledgment, the entire cash contribution deduction is
                                     disallowed. See Addis v. Commissioner, 118 T.C. 528 (2002),
                                     aff ’d, 374 F.3d 881 (9th Cir. 2004); see also Viralam v.
                                     Commissioner, 136 T.C. 151, 170–171 (2011); Averyt v.
                                     Commissioner, T.C. Memo. 2012–198. Because the receipt of
                                     an expected or actual benefit is a material fact that remains
                                     in dispute, summary judgment is not proper on this issue.
                                        The Wachters assert that the checks and letters for each
                                     year as well as the 2004 agreement can be taken together to
                                     meet the requirements of a contemporaneous written
                                     acknowledgment. In Irby v. Commissioner, 139 T.C. 371, 389
                                     (2012), the Court held that a series of documents may con-
                                     stitute a contemporaneous written acknowledgment, and the
                                     Wachters may yet be able to authenticate disputed docu-
                                     ments and provide additional documents to supplement those
                                           5 At
                                            minimum, respondent asserts that the goods or services provided
                                     were the appraisals NRT obtained and the partial funding it supplied for
                                     the bargain sales.
                                       6 Respondent also contests the authenticity of this document.

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                                     (140)                         WACHTER v. COMMISSIONER                                        151

                                     they have included with the stipulation of facts. Because we
                                     must construe all factual inferences in favor of the non-
                                     moving party, we must deny summary judgment regarding
                                     the cash charitable contribution deductions.
                                     Conclusion
                                        We conclude that respondent is entitled to partial sum-
                                     mary judgment disallowing the charitable contribution
                                     deductions for the bargain sales of the conservation ease-
                                     ments because North Dakota law prohibits real property
                                     easements from being granted in perpetuity. Thus a con-
                                     servation easement conveyed subject to the statute cannot
                                     result in a charitable contribution deduction under section
                                     170(f)(3)(B)(iii). However, because material facts remain in
                                     dispute as to whether the Wachters expected to receive or
                                     actually received goods or services in exchange for their cash
                                     contributions and the Wachters may yet be able to supple-
                                     ment the record to meet all of the requirements of a contem-
                                     poraneous written acknowledgment, we will deny the motion
                                     for partial summary judgment on the issue of the cash con-
                                     tributions.
                                        To reflect the foregoing,
                                                                                 An appropriate order will be issued.

                                                                               f

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