S.J. Quinney College of Law Professor Nancy McLaughlin was quoted in a taxanalysts.com article on conservation easements and the recent Douglas G. Carroll III et ux. v. Commissioner decision. The article is titled, “Tax Court Signal on Easements: The Rules Are the Rules.”
Practitioners are debating whether the U.S. Tax Court went too far in its recent decision to strip a charitable deduction for a $1.2 million conservation easement donation in Maryland because the easement wasn’t granted in perpetuity and therefore the donation didn’t meet code requirements.
The court’s Carroll opinion is part of a growing body of case law reflecting the IRS’s efforts to enforce perpetuity requirements in section 170(h), University of Utah professor Nancy Assaf McLaughlin said. She cited 11 cases involving denials of deductions, including Bosque Canyon Ranch LP et al. v. Commissioner, T.C. Memo. 2015-130 (2015) , and Walter C. Minnick et ux. v. Commissioner, T.C. Memo. 2012-345 (2012) , as support for the court’s move to uphold perpetuity requirements, which she said “are of vital importance.”
“The holding in Carroll is both sensible and appropriate,” McLaughlin said. “The public is investing billions in conservation easements through the deduction and the ‘proceeds’ requirement is intended to protect that investment.”