T.C. Memo. 2010-196
UNITED STATES TAX COURT
HENRY R. LORD, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 13618-06, 20720-06. Filed September 8, 2010.
Gerald H. Lean, for petitioner.
Erin R. Hines and Andrew M. Stroot, for respondent.
MEMORANDUM OPINION
FOLEY, Judge: After concessions, the issue for decision is
whether petitioner obtained a qualified appraisal of a
conservation easement to substantiate charitable contribution
deductions relating to 2001 and 2004 (years in issue). The
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parties submitted these cases fully stipulated pursuant to Rule
122.1
Background
From 1992 until 2003, petitioner and his wife owned real
property on Barroll Road in Baltimore, Maryland. On December 30,
1999, they granted a deed of conservation easement relating to
the property (easement contribution) to Land Preservation Trust,
Inc., an organization exempt from Federal income taxation
pursuant to section 501(c)(3). Page Appraisal Company, Inc.,
which was engaged by petitioner, produced an appraisal report
stating that the easement contribution’s estimated market value
was $242,500 (Page appraisal). The Page appraisal had an
effective date of December 31, 1999, and a report date of January
4, 2000.
On April 25, 2003, petitioner and his wife untimely
submitted a 1999 joint Federal income tax return (1999 return) on
which they claimed a charitable contribution deduction relating
to the easement contribution. With the 1999 return they included
Form 8283, Noncash Charitable Contributions, and reported the
easement contribution; a December 30, 1999, contribution date; a
December 31, 1999, appraisal date; and a $242,500 appraised
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as amended and in effect for
the years in issue, and all Rule references are to the Tax Court
Rules of Practice and Procedure.
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value.
Petitioner failed to timely file Federal income tax returns
for the years in issue. Respondent, on April 14, 2006, sent
petitioner a notice of deficiency relating to 2001 and on July
10, 2006, sent petitioner a notice of deficiency relating to
2004. With respect to the years in issue, respondent determined
that petitioner was liable for deficiencies and additions to tax
for failure to file a return, pursuant to section 6651(a)(1);
failure to timely pay tax, pursuant to section 6651(a)(2); and
failure to pay estimated income tax, pursuant to section
6654(a).2 Petitioner and his wife, on June 20, 2006, submitted a
2001 joint Federal income tax return and on April 18, 2007,
submitted a 2004 joint Federal income tax return. They claimed a
charitable contribution deduction relating to the easement
contribution on both returns.
On July 17 and October 12, 2006, petitioner, while residing
in Baltimore, Maryland, filed petitions with this Court relating
to the notices of deficiency. On April 1, 2008, this Court
granted respondent’s motion to consolidate for purposes of trial,
briefing, and opinion.
Discussion
2
Petitioner concedes the application of all additions to tax
relating to the years in issue.
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A taxpayer claiming a deduction for a noncash charitable
contribution of more than $5,000 must obtain a qualified
appraisal to substantiate the deduction. Sec. 1.170A-
13(c)(2)(i)(A), Income Tax Regs. A qualified appraisal must
include the date (or expected date) of contribution, the date on
which the property was appraised, and the appraised fair market
value of the property on the date (or expected date) of the
contribution. Sec. 1.170A-13(c)(3)(ii)(C), (H), (I), Income Tax
Regs. In addition, the appraisal must be made not earlier than
60 days before the contribution date of the appraised property
nor later than the due date of the tax return on which a
deduction is first claimed. Sec. 1.170A-13(c)(3)(i)(A), Income
Tax Regs.
Respondent contends that petitioner failed to obtain a
qualified appraisal to substantiate the easement contribution
pursuant to section 1.170A-13(c), Income Tax Regs., and is
therefore not entitled to charitable contribution deductions
relating to the years in issue.3 In particular, respondent
contends that the Page appraisal fails to state the contribution
date, the date the appraisal was performed, and the fair market
3
Pursuant to sec. 7491(a), taxpayers have the burden of
proof unless they introduce credible evidence relating to an
issue that would shift the burden to the Commissioner. See Rule
142(a). The applicability of sec. 7491(a), however, does not
impact the outcome of this case.
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value of the easement contribution on the contribution date.
Petitioner, citing Bond v. Commissioner, 100 T.C. 32 (1993),
contends that he substantially complied with the regulations by
providing respondent with the Page appraisal and Form 8283.
The Page appraisal is not a qualified appraisal. The Page
appraisal does not include the following significant information:
The easement contribution date, the date the appraisal was
performed, or the appraised fair market value of the easement
contribution on the contribution date. Further, the doctrine of
substantial compliance is not applicable if significant
information is omitted. See Hewitt v. Commissioner, 109 T.C.
258, 263-265 (1997), affd. without published opinion 166 F.3d 332
(4th Cir. 1998). The appraised fair market value of the easement
contribution on the contribution date is not set forth in the
Page appraisal, Form 8283, or any other evidence. The Page
appraisal, therefore, fails to meet the requirements of section
1.170A-13(c)(3)(ii)(I), Income Tax Regs. We simply do not know
what the appraiser intended in referencing the Page appraisal’s
“effective date” and “report date”, and there was no testimony to
clarify this matter because the case was fully stipulated. In
sum, petitioner failed to substantiate the easement contribution
and is not entitled to charitable contribution deductions
relating to the years in issue.
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Contentions we have not addressed are irrelevant, moot, or
meritless.
Decisions will be entered
under Rule 155.