In Uncategorized on 08/24/2017 at 16:03

When You’re Drawing Up a Façade Easement

Y’all will recall poor Randy Schrimsher and his Ten Dollar misunderstanding, which torpedoed his Section 170 conservation easement write-off, but for any latecomers, check out my blogposts “Yes In Deed,” 7/16/12, and “Valuable Consideration?” 10/3/12.

Randy got nailed when his deed of gift of a conservation easement recited “TEN DOLLARS [sic] and other good and valuable consideration.” Now every dirt lawyer worth their Mephistos knows that’s boilerplate, like the one peppercorn in the will, cutting off a rapscalliony heir-at-law, which inspired generations of civilian historians to prate about how valuable spices were in medieval England.

Remember, “no goods or services were received” by donor in exchange for said gift, or else no deduction.

But today Judge Lauber gives a discount in 310 Retail, LLC, Zeller-310, LLC, Tax Matters Partner, 2017 T. C. Memo. 164, filed 8/24/17. 310 gets by on the deed of gift, which recites their benevolent objectives. Judge Lauber likes Gayle and Maggie Averyt, whose beneficence I more particularly bounded and described in my blogpost “Yes In Deed,” hereinabove cited. Gayle and Maggie never mentioned worldly pelf.

310 did, but it was only a buck. Maybe it’s the effect of inflation, but Judge Lauber gives 310 a bye on that one. The urge to merge overcomes the Almighty Dollar. The 310 deed had the usual boilerplate about all reps, warranties, negotiations, discussions, understandings, agreements, tells, cries and whispers are merged in the deed.

“By stipulating that the deed of easement constituted the parties’ ‘entire agreement,’ the merger clause negated the provision or receipt of any consideration not stated in that document.  We concluded that the merger clause, read in conjunction with other statements in the deed of easement, supplied the affirmative indication required by section 170(f)(8)(B).  We accordingly held that the deed of easement, ‘taken as a whole, provides that no goods or services were received in exchange for the contribution.’” 2017 T. C. Memo. 164, at p. 15. (Citation omitted).

Anyway, “Apart from the charitable conveyance and the covenants attending the easement, the only “consideration” mentioned in the deed of easement is the granting provision’s reference to ‘consideration of One Dollar ($1.00) * * * and other good and valuable consideration.’  Neither party contends that [donee] actually furnished [310] with any valuable goods or services in exchange for its gift.  Evaluating this clause in the context of the deed overall, we conclude that this clause constitutes ‘boilerplate language and has no legal effect for purposes of sec. 170(f)(8).’” 2017 T. C. Memo. 164, at p. 17 (Citation omitted).

310 tried a late-filed Form 990 from the qualified donee, but 15 West 17th Street put paid to that. See my blogpost “Executive Nullification,” 12/22/16.

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