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Carter v. Comm'r

United States Tax Court

February 3, 2020, Filed

Docket Nos. 23621-15, 23647-15.1

Opinion

 [**3]  MEMORANDUM FINDINGS OF FACT AND OPINION

HALPERN, Judge: Respondent determined deficiencies in the income tax of petitioners Nathaniel and Stella Carter of $611,144, $554,845, and $809,461 for their 2011, 2012, and 2013 taxable years, respectively. He also determined accuracy-related penalties under section 66622 for those years of $230,115, $221,938, and $320,334, respectively. Respondent determined deficiencies in the income tax of petitioner Ralph Evans of $2,564,241 and $104,606 for his 2011 and 2012 taxable years, respectively, and accuracy-related penalties for those years of $1,008,973 and $20,921, respectively. After concessions, the issues remaining for our decision are (1) whether petitioners are entitled to charitable contribution deductions as a result of the conveyance by Dover Hall Plantation, LLC, to the North American Land Trust (NALT) of an easement on property known as Dover Hall and (2) if not, whether they are subject to gross valuation misstatement penalties under section 6662(a), (b)(3), (e), and (h).3

 [**4]  FINDINGS OF FACT

Dover Hall

In 2005, Dover Hall Plantation, [*2]  LLC (then owned entirely by Mr. Carter), purchased a 5,245-acre tract of land in Glynn County, Georgia, known as Dover Hall. In 2009, Mr. Evans purchased a 50% interest in Dover Hall Plantation, LLC.

Grant of Easement

In 2011, Dover Hall Plantation, LLC, conveyed to NALT an easement over 500 acres at the western edge of Dover Hall. The deed of easement restricts the use of the covered property and, among other things, generally prohibits the construction or occupancy of any dwellings. The deed lists as the easement's  [**5]  conservation purposes (1) the preservation of a relatively natural habitat of fish, wildlife, or plants, or similar ecosystem and (2) preservation of the covered property as an open space that will provide a significant public benefit by (a) providing scenic enjoyment to the general public and (b) advancing a clearly delineated governmental conservation policy.

Notwithstanding the general restriction on the development of the property covered by the easement, Dover Hall Plantation, LLC, retained the right to build a single-family dwelling on each of 11 "building areas" of no more than two acres, the locations of which were to be determined, subject to NALT's approval.

OPINION

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2020 U.S. Tax Ct. LEXIS 7 *; T.C. Memo 2020-21 **

NATHANIEL A. CARTER AND STELLA C. CARTER, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent; RALPH G. EVANS, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Disposition: Decisions will be entered under Rule 155.

CORE TERMS

easement, perpetual, conservation, purposes, donor, building area, taxpayer, cases, valuation, initial determination, homesite, parcels, misstatement, Letters, restrictions, partnership, income tax, cheese, deed, real property, deductions, holes, conservation easement, petitioners', preservation, substitution, rights, sites, charitable contribution, real property interest

Real Property Law, Limited Use Rights, Easements, Conservation Easements, Tax Law, Nonbusiness Expenses, Charitable Contributions, Allowance of Deduction, Disallowance of Deductions, Administrative Law, Agency Adjudication, Decisions, Stare Decisis, Retirement Plans, Qualified Retirement Plans, Determination Letters, Business & Corporate Compliance, Tax Credits & Liabilities, Civil Penalties, Accuracy Related Penalty, Federal Tax Administration & Procedures, Tax Court, Burdens of Proof, Civil Penalties

Real Property Law, Limited Use Rights, Easements, Conservation Easements, Tax Law, Nonbusiness Expenses, Charitable Contributions, Allowance of Deduction, Disallowance of Deductions, Administrative Law, Agency Adjudication, Decisions, Stare Decisis, Retirement Plans, Qualified Retirement Plans, Determination Letters, Business & Corporate Compliance, Tax Credits & Liabilities, Civil Penalties, Accuracy Related Penalty, Federal Tax Administration & Procedures, Tax Court, Burdens of Proof, Civil Penalties