TaxNewsFlash-Exempt Organizations

October 31, 2008
No. 2008-107

PRINTABLE VERSION

Tax Court: Accuracy-Related Penalty Sustained for Overvalued (by 400%) Charitable Contribution of Façade Easement and Other Rights

The U.S. Tax Court on October 30, 2008, issued an opinion concerning a partnership’s charitable contribution deduction of $7.445 million with respect to a qualified conservation contribution (including a façade easement of the former Maison Blanche building located along Canal Street in New Orleans).

The Tax Court agreed with the IRS that the amount of the charitable contribution deduction was overstated, and determined that the appropriate amount was $1.792 million. Because it was determined that the partnership had overvalued the value of the conveyed rights (servitude) by more than 400% and because there was no reasonable cause for the misstatement, the Tax Court sustained application of an accuracy-related penalty under section 6662(a) on the basis of a gross valuation misstatement. Whitehouse Hotel LP v. Commissioner, 131 T.C. No. 10 (October 30, 2008).

For an electronic version of the 105-page opinion: Whitehouse Hotel

For more information, contact Rick Speizman, National Partner-In-Charge, KPMG’s Exempt Organizations Tax Practice (ExoTax), at (202) 533-3084 or rspeizma@kpmg.com

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