Tax Court In Brief | Sparta Pink Property, LLC v. Comm'r | Conservation Easement And Additional Fodder For Circuit Split

• Published date: 02 September 2022
• Subject Matter: Litigation, Mediation & Arbitration, Tax, Trials & Appeals & Compensation, Tax Authorities
• Law Firm: Freeman Law
• Author: Freeman Law

The Tax Court in Brief - August 29th - September 2nd, 2022

Freeman Law's "The Tax Court in Brief" covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

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Tax Litigation: The Week of August 29th, 2022, through September 2nd, 2022

• Domdom v. Comm'r, T.C. Summary Opinion 2022-17 | August 30, 2022 | Carluzzo, J. | Dkt. No 18270-17S
• Pressman v. Comm'r, T.C. Summ. Op 2022-15 | August 29, 2022 | Panuthos, S.T.J. | Dkt. No. 16084-19S
• George Anton Remisovsky and Ellen Jones-Remisovsky v. Comm'r, T.C. Memo. 2022-89| August 30 2022?| Lauber, A. | Dkt. No 11945-20L
• Dern v. Comm'r, T.C. Memo. 2022-90| August 30, 2022 | Vasquez, J. | Dkt. No. 7595-20

Sparta Pink Property, LLC v. Comm'r, T.C. Memo. 2022-88 | August 29, 2022 | Lauber, J. | Dkt. No. 12114-20

Summary: This case involves a charitable contribution deduction claimed by Sparta Pink Property, LLC (Sparta), for the donation of a conservation easement. In August 2016 WASCO, LLC, acquired a 99% interest in Sparta by contributing to it roughly 286 acres of land (Property). In December 2016 Sparta granted to the Southern Conservation Trust (grantee) a conservation easement over the Property. On its 2016 Form 1065, U.S. Return of Partnership Income, Sparta claimed a charitable contribution deduction of $15,632,748 (appraised value) for its donation of the easement. The easement deed recited the conservation purposes and generally prohibits commercial or residential development. But it reserved certain rights to Sparta, including the rights to repair, improve, enlarge, and replace existing improvements on the Property. The deed also provided that, "[i]f circumstances arise in the future that render the Purpose of this Conservation Easement impossible to accomplish," giving rise to a judicial extinguishment of the easement, then on any subsequent sale or conversion the grantee is entitled to its fair market value (FMV) portion of the proceeds, defined as equal to the current FMV of the easement determined by multiplying the sale proceeds by a fraction specified in the regulations. But before this fraction is applied, the sale proceeds were to be reduced by "any increase in value after the date of this Conservation Easement attributable to improvements." The IRS disallowed most (all but $44,748) of the deduction claimed by Sparta...