A Tax Court decision denying a deduction for qualified conservation contribution to a limited liability company (LLC) was vacated and remanded by the 11th Circuit. The taxpayer developed and operated a golf club and had claimed a charitable deduction for donating a conservation easement over property that included a private golf course and undeveloped land.

The taxpayer argued that the word “significant” used in Reg. §1.170A-14(d)(3)(i) impermissibly departed from the conservation purpose requirement set out in Code Sec. 170. Further, the conservation easements across golf course qualified for a deduction because they met the otherwise-applicable standards. Moreover, the Tax Court’s implicit finding that the LLC did not contribute the easement “for the protection of a relatively natural habitat of fish, wildlife, or plants, or similar ecosystem” was based on erroneous finding of fact and was wrong as a matter of law.

In addition, the land still met the “rare, endangered, or threatened, or species” requirement because the land contained 61 species of birds on protected lists, as testified by the taxpayer’s and IRS’s experts. Finally, the appeals court held that the easement did preserve the scenic enjoyment of the public because the 10-foot river banks only blocked the view of the golf course, not the trees and wetlands.

Vacating and remanding the Tax Court, 116 TCM 262, Dec. 61,260(M), TC Memo. 2018-146.

Champions Retreat Golf Founders, LLC, CA-11

Wilson Tax Law Group APLC (www.wilsontaxlaw.com) is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense. The firm was founded in 2014 by Joseph P. Wilson, a former Federal tax prosecutor, trial attorney for the IRS and trial attorney for the Franchise Tax Board.For further information, or to arrange a consultation, please contact:

Wilson Tax Law Group, APLC

Newport Beach and Yorba Linda, California

Tel: 949-397-2292 (Newport Office)

Tel: 714-463-4430 (Yorba Linda Office)

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