In Uncategorized on 08/17/2020 at 16:28

I’ve blogged so many scenic/conservation easement dodges that crack up, and historic façade crumbles, artistic collapses, and sporting icon-vs-ambassador unravelings, that I’m halfway to the shootdown before the case even gets airborne.

But that Obliging Jurist, Judge David Gustafson, knocks IRS’ case for six (as the cricketers say) today. Here’s Peter C. Emanouil And Pascale Emanouil, 2020 T. C. Memo. 120, filed 8/17/20.

It’s Pete the developer’s case. He commenced to build an affordable housing development in the thriving, striving commune of Westford, MA (and no, I don’t know where that is, either; perhaps my colleague Peter Reilly, CPA, now or formerly a Bay Stater, can tell us). Pete got the usual schlecht (please pardon an arcane technical term) from the communards (those who governed the commune), so he chopped and changed his plans as required.

As Pete’s job was nearing completion, he got a couple appraisals (hi, Judge Holmes) and donated some of the land he had, but didn’t build on, to the municipality. IRS claimed the appraisals weren’t qualified, because they didn’t state they were intended for tax purposes, and didn’t state the anticipated date of donation. The other nine (count ’em, nine) Reg. Section 1.170A-13(c)(3)(ii) factors are all there. So Judge Gustafson plays the “substantial compliance” card. See my blogpost “Method, No Madness,” 9/21/16. Anyway, the 8283s that accompanied Pete’s and Pas’ return stated the date of contribution, and that was within 30 days of the appraisal, which said it was current.

Finally, Pete’s appraiser testifies the appraisal was a market value appraisal. “Market value is market value, and whether you are preparing this for an owner or a bank, or a public entity, or for any purpose, that market value premise governs, and the analysis must be true to that principle. The intended use and user is inconsequential.” 2020 T. C. Memo. 120, at p. 42.  Judge Gustafson agrees.

And since Pete donated the land and not the easement, he sheds the abusive shelter mantle.

Enter quid pro quo. Did Pete hand over the property to quell the communards?

The communards gave Pete a laundry list of requirements to get the development approved. They did ask for open space, but not for land; and the open space wasn’t on the donated land. Nobody testified there was a quid pro quo. And it is very unlikely the communards would have played “trust me, trust me,” and approved anything without a written agreement. Besides, eight years before, Pete had sued the communards over another deal, so while they were civil they were hardly buddies.

There’s the usual jumpball between appraisers, but Pete’s crew prevails, especially since IRS’ appraiser relied on the same plot plan as Pete’s appraiser, while claiming excessive discounts and absorption. Read the appraisal joust, as an example of how it should be done.

Since the deductions are sustained, no deficiencies, no chops.

A Taishoff “Good Job, First Class,” to Pete’s trusty attorneys at McLane Middleton, and his even trustier appraiser Ms. Pamela McKinney.

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