[MassHistPres] Scheidelman v. Commissioner

[Stefan Nagel]

Dear Mass Preservationists - 

 

Because of its relative significance, and in response to requests, I've put
together for your edification this summary of the recently released ruling
by the Second Circuit Court of Appeals in Scheidelman v. Commissioner, No.
10-3587, 2nd Cir. Ct. Appeals.  This was an appeal of the Tax Court ruling
in Scheidelman v. Commissioner, 100 TCM (2010) involving the donation of a
historic preservation easement (restriction) in New York City.

 

The Court of Appeals issued three important findings:

 

1.     Minor omissions in the completion of the gift acknowledgment Form
8283 (in this case, the omission of property acquisition information) will
not invalidate the underlying donation.  The court applied a "substantial
compliance" standard in contrast to the Tax Court's and IRS' oft invoked
"strict compliance" standard.  

2.     The ruling affirms the deductibility of easement/restriction
stewardship contributions even if payment is not strictly voluntary in the
usual sense of the term.  While payment of the contribution may be a
"prerequisite" to the acceptance of an easement/restriction, the donor did
not receive in return any "bargained for" benefit or goods and services
"desired by the taxpayer".  A cash contribution (even mandatory in nature)
which serves to fund the administration of another charitable donation is
sufficiently voluntary to constitute a charitable contribution.  This result
is not changed even where the payment is based on a percentage of the
easement value.

3.     Finally, the court held that an easement appraisal may be "qualified"
even if certain valuation shortcuts are applied by the appraiser.  In this
case, the appraiser adapted value diminution ranges from outside sources
(including the ruling in Hilborn v. Commissioner, 85 T. C. 677 (1985) and
then current IRS informational materials since removed from circulation).
The appraiser's application of these sources to his analysis in conjunction
with other factors cited by the appraiser constituted "reasoned analysis",
and therefore met the threshold requirements of a "qualified appraisal".

 

The ruling will likely cause a significant amount of hand-wringing at the
IRS and inspire additional appeals of other recent Tax Court rulings.  

 

Stefan

 

_______________________________
Stefan Nagel, Esq., Of Counsel
Law Office of Stephen J. Small, Esq., P.C.
One Gateway Center, Suite 801
Newton, MA  02458-2804
Phone:  617-357-4012, Ext. 261
Fax:  617-357-1857
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