Emanouil v. Comm’r, T.C. Memo. 2020-120 | August 17, 2020 | Gustafson, J. | Dkt. No. 5089-17

Short Summary:  Mr. Emanouil is a real estate developer.  In 1999, he purchased approximately 200 acres of undeveloped property in Westford, Massachusetts.  Although he made several attempts to develop or sell the property over the next several years, he ultimately obtained approval for an affordable housing project on 104 acres of the property.  Towards the conclusion of the project in 2008, he donated 16 acres of the property to Westford.  The following year, after Westford had approved the affordable housing project, Mr. Emanouil donated an additional 71 acres of the property to Westford.

On his 2008 return, Mr. Emanouil reported a $1.5 million charitable contribution deduction with respect to the 16-acre donation.  On his 2009 return, he reported a $2.5 million charitable contribution deduction with respect to the 71-acre donation.  Due to limitations on claiming the charitable contribution deductions for each year, Mr. Emanouil carried forward the deductions to his 2010 through 2012 tax years.

The IRS examined Mr. Emanouil’s 2010, 2011, and 2012 returns and issued a notice of deficiency disallowing the carryover charitable contribution deductions.  The notice of deficiency disallowed the carryovers because, according to the IRS, Mr. Emanouil had failed to substantiate the reported values of the properties transferred and failed to show that the properties were transferred with charitable intent.  The IRS also determined accuracy-related penalties for such years.

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