Lord v. Comm'r

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.