The Tax Court in Brief

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The Week of October 31 – November 6, 2020

Glade Creek Partners, LLC, Sequatchie Holdings, LLC, TMP v. Comm’r, T.C. Memo. 2020-148 | November 2, 2020 | Goeke, J. | Dkt. No. 22272-17

Short Summary:  In 2012, Glade Creek Partners, LLC (Glade Creek) donated a conservation easement on 1,313 acres of undeveloped real estate in Bledsoe County, Tennessee.  It claimed a $17.5 million charitable contribution deduction for its 2012 short tax year period.  The IRS challenged the charitable contribution deduction and sought penalties.

Key Issue:  Whether Glade Creek is entitled to the charitable contribution deduction under the technical requirements of Section 170 and whether Glade Creek is liable for a 40% gross valuation misstatement penalty under Section 6662(e) and (h) or alternatively the 20% valuation penalty under Section 6662(b)(3).

Primary Holdings

  • Glade Creed is not entitled to a full conservation easement deduction because the easement’s conservation purposes are not protected in perpetuity. However, Glade Creek is entitled to a cash charitable contribution deduction of $35,077.  In addition, Glade Creek is liable for a 20% accuracy-related penalty for a substantial valuation misstatement for any claimed charitable contribution deduction in excess of $8,876,771.

Key Points of Law:

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