By Keith A. Wood

This is the second installment of this article. The first installment was previously posted on the Tax Section’s blog.

I. No Easement Charitable Contribution Deduction Allowed Where Form 8283 Did Not Include Cost Basis Information.

In yet another case of a failed charitable contribution donation deduction, in Oakhill Woods, LLC v. Commission, TC Memo 2020-24, the Tax Court disallowed an easement charitable contribution donation deduction because the taxpayer failed to include tax basis information on the Form 8283. That resulted in a disallowed deduction of almost $8 million.

On its tax return for the year of the donation, the taxpayer did not report its income tax basis in the donated easement but instead added an attachment to the Form 8283 stating that “the basis of the property is not taken into consideration when computing the amount of the deduction.” The Tax Court ruled, since the tax basis information was not included on the Form 8283 as originally filed for the year of the donation, the charitable deduction failed the substantiation requirements of Section 170.

The Tax Court noted the taxpayer may not qualify for the reasonable cause defense under Section 170(f)(11)(A)(ii)(II). The LLC argued it prepared and filed its Form 8283 in this manner based on advice of its CPA, who prepared the return, as well as the advice of a consulting firm named Forever Forests. Because Forever Forests was involved with the conservation donation, another court would have to determine, at a later date, whether it was a “competent and independent advisor unburdened with a conflict of interest” and whether the CPA was a competent tax professional who provided tax advice independent of that supplied by Forever Forests.

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