Attorney-at-Law

COMPARABLE ISN’T QUALIFIED

In Uncategorized on 12/11/2017 at 16:04

Or Improbable

Judge Morrison holding as set forth at the head hereof costs Salt Point Timber, LLC, John B. Hood, Tax Matters Partner, 2017 T. C. Memo. 245, filed 12/11/17, a $2,130,000 charitable deduction. And the problem is that a “comparable” guardian of a conservation easement isn’t necessarily a “qualified organization.”

“The term ‘qualified organization’, as the term is used in section 170(h)(1)(B), is defined by section 170(h)(3).” 2017 T. C. Memo. 245, at p. 7. Illuminating, isn’t it?

Well, the Lord Berkeley Conservation Trust is definitely a qualified organization, and they’re the outfit named in the easement the Salties gave over the 1,000 acres of South Carolina timberland.

But the Salties’ easement had a substitution clause. If the Salties and any next-door neighbor whose land was subject to a conservation easement did a swap, the easement in favor of Lord Berkeley Land Trust vanished.

All that was required was that the conservation easement be “comparable.”  But did the donee/grantee guardian under the comparable easement have to be a “qualified organization”?

No, says Judge Morrison.

Likewise, the chances of a swap meet were not “so remote as to be negligible.” Remember Larry and Lorna Graev? See my blogpost “Money-Back Guarantee,” 6/24/13.

“Hood has failed to adduce persuasive evidence that the three conditions for replacing the easement…  are so highly improbable or remote that they would be ignored.  Nothing in the record indicates that Salt Point Timber would be averse to transferring the 1,000 acres.  Although the record does not reveal whether any land adjacent to the 1,000 acres is encumbered by conservation easements, several properties close to (but not adjacent to) the 1,000 acres are encumbered by conservation easements.  These include properties that, like the 1,000 acres, are large landholdings in Berkeley County with river frontage and wetland habitats.  When the Trust for Public Land originally applied for a federal grant under the North American Wetlands Conservation Act, 16 U.S.C. secs. 4401-4414 (Supp. II 2002), that would have funded its acquisition of the conservation easement, the trust stated that it expected that the donation of the conservation easement would ‘encourage neighboring landowners to commit their properties to conservation in a domino-effect fashion’.  State and local entities still encourage and subsidize the donation of conservation easements in this particular geographic area.  It is also significant that Salt Point Timber and the Lord Berkeley trust bothered to put [the swap meet clause] in the easement.” 2017 T. C. Memo. 245, at pp. 20-21.

If the swap meet was so thoroughly improbable, why mention it?

Takeaway- Drafters of conservation easements, take it slowly and carefully. Eschew boilerplate. Keep Section 170 ever before you. And profit from the example of those that crashed.

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