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Brooks v. Comm'r

Brooks v. Comm'r

United States Tax Court

December 19, 2022, Decided; December 19, 2022, Filed

Docket No. 28206-15.

Opinion

MEMORANDUM FINDINGS OF FACT AND OPINION

WELLS, Judge: Respondent issued a notice of deficiency to petitioners, Kenneth M. Brooks and Anita Wolke Brooks, in which he disallowed carryover charitable contribution deductions relating to petitioners' interest in the Kenneth Brooks and Anita Wolke Brooks Family, LLC's noncash charitable contribution of a conservation easement. The questions presented are whether petitioners are (1) entitled to deduct carryover charitable contributions of $657,135 $763,835, and $743,862 and (2) liable for accuracy-related penalties pursuant to section 6662(h),1 for the 2010, 2011, and 2012 tax years, respectively.

 [*2]  FINDINGS OF FACT

The parties filed a Stipulation of Facts, which is hereby incorporated by reference into our findings. When the Petition was filed, petitioners resided in Virginia. On December 15, 2006, the Kenneth Brooks & Anita Wolke Brooks Family, LLC2 (LLC), which is co-owned by petitioners, purchased 85.314 acres of real property known as Cotton Row Farm in Liberty County, Georgia, for $1,350,000. On the same day, [**2]  the LLC subdivided the property into two parcels of 44.113 and 41.201 acres.

A. Easement Deed and Attachments

The LLC granted and recorded a conservation easement over the 41.201-acre parcel (encumbered parcel) on December 27, 2007, to Liberty County, Georgia, a political subdivision of the State of Georgia and a qualified organization pursuant to section 170(h)(3).

The deed granting the easement (Easement Deed) provides that

Grantor, for and in consideration of the sum of ten dollars ($10.00) and other good and valuable consideration and in consideration of the covenants, mutual agreements, conditions and promises herein contained, does hereby grant unto the Grantee, its successors and assigns, forever a conservation easement as defined in O.C.G.A. §§ 44-10-1 et seq. in perpetuity, over the Protected Property of the nature and character and to the extent herein set forth.

The Easement Deed does not otherwise refer to any consideration paid by Liberty County to petitioners or their LLC (the grantor).

OPINION

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T.C. Memo 2022-122 *; 2022 Tax Ct. Memo LEXIS 122 **

KENNETH M. BROOKS AND ANITA WOLKE BROOKS, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Disposition: Decision will be entered for respondent.

CORE TERMS

easement, deed, parcel, encumbered, conservation easement, conservation, valuation, Baseline, donation, fair market value, Farm, entire agreement, charitable contribution, documentation, taxpayer, sales, petitioners', cost basis, misstatement, calculated, comparable, properties, map, subject property, deductions, parties, roads, accuracy-related, regulations, includes

Tax Law, Audits & Investigations, Burdens of Proof, Burden of Taxpayer, Federal Tax Administration & Procedures, Tax Court, Procedural Matters, Real Property Law, Limited Use Rights, Easements, Conservation Easements, Nonbusiness Expenses, Charitable Contributions, Allowance of Deduction, Disallowance of Deductions, Burdens of Proof, Business & Corporate Compliance, Tax Credits & Liabilities, Civil Penalties, Accuracy Related Penalty, Burden of Government, Summary Judgment, Supporting Materials, Federal Income Tax Computation, Valuation, Real Property

Tax Law, Audits & Investigations, Burdens of Proof, Burden of Taxpayer, Federal Tax Administration & Procedures, Tax Court, Procedural Matters, Real Property Law, Limited Use Rights, Easements, Conservation Easements, Nonbusiness Expenses, Charitable Contributions, Allowance of Deduction, Disallowance of Deductions, Burdens of Proof, Business & Corporate Compliance, Tax Credits & Liabilities, Civil Penalties, Accuracy Related Penalty, Burden of Government, Summary Judgment, Supporting Materials, Federal Income Tax Computation, Valuation, Real Property