The U.S. Court of Appeals for the Eighth Circuit today affirmed a decision of the U.S. Tax Court, that a private golf club was not entitled to a charitable deduction for a conservation easement because under the regulations, no deduction is allowed for an interest in property that is subject to a mortgage unless the mortgage is subordinated before the easement is conveyed.
The case is: RP Golf, LLC v. Commissioner, No. 16-3277 (8th Cir. June 26, 2017). Read the Eighth Circuit’s decision [PDF 94 KB]
A timeline of the events in this case reveals the following:
The IRS denied the deduction for the charitable contribution, and the Tax Court agreed, finding that the easement was not “protected in perpetuity” and thus was not a qualified conservation contribution because the banks had not subordinated their rights in the mortgaged property to the right of the not-for-profit to enforce the conservation purposes of the gift in perpetuity (as required by Reg. section 1.170A-14(g)(2)). Read TaxNewsFlash-United States
The Eighth Circuit today affirmed, finding that because the banks’ mortgages were not subordinated before the charitable conveyance occurred in December 2003, the golf course was not entitled to a deduction on its 2003 tax return for a qualified conservation easement.
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