* * * BREAKING NEWS * * *
Simmons US Tax Court Decision Handed Down

On September 15, 2009, the U.S. Tax Court handed down its decision in Simmons v. Commissioner (T.C. Memo. 2009-208). Mrs. Simmons had donated two easements to The L'Enfant Trust, one in 2003 and one in 2004, claiming charitable contribution deductions. The deductions were entirely disallowed by the Internal Revenue Service, which asserted that the donations were valueless and that in any event they failed to comply with statutory requirements for deductible conservation easements because of various provisions in the easement deed.

The Court held unambiguously that the easements on Mrs. Simmons properties are valid conservation easements, and it struck down all of the IRS arguments that various provisions in The L'Enfant Trust's deeds made Mrs. Simmons' gifts non-deductible. The Court also made clear "that the easements granted do affect the fair market value of the subject properties," and rejected as not "credible" the IRS's expert opinion to the contrary. The Court came close to "splitting the difference" between the deduction Mrs. Simmons had claimed and the zero valuation asserted by the IRS appraiser, finding that the easements resulted in a 5-percent reduction in the values of the subject properties. This reduction, the Court explained, "stems from the heightened financial burdens of an eased façade and L'Enfant's affirmative enforcement of its easements."
 
Previously, The L'Enfant Trust advised donors of the IRS's vigorous campaign against conservation easements. It is unclear whether the IRS will abandon its pursuit of these issues given the Simmons case. However, the Court's decision should provide D.C. property owners comfort that donations of conservation easements to The L'Enfant Trust and similar organizations with a proven record of affirmative easement enforcement will allow owners to take federal tax deductions.

* Other Breaking News *
Internal Revenue Service Advisory Council (IRSAC) released its annual general report on November 18, 2009

As a service to the IRS and taxpayers, the Internal Revenue Service Advisory Council (IRSAC) released its annual general report on November 18, 2009.  IRSAC is a diverse group of some thirty, mostly private-sector tax practitioners that the IRS assembles to provide public input on various IRS issues.  In this year's report the Council first addressed the issue of "IRS Challenges to Deductions for Historic Preservation Easements," summarizing their findings and recommendations as follows:

"There is a belief that the current program, in which the IRS takes a very strict view regarding the value of these donations, is having the effect of diluting the intent of Section 170(h) of the Internal Revenue Code, which provides for a tax incentive by means of a charitable deduction for the donation of an historic easement. The current IRS audit effort strains the agency's resources and may fail to distinguish between a legitimate deduction authorized by statute and an abusive tax shelter. Among the changes IRSAC recommends are a [10%] safe-harbor audit policy and subject to the requirements of FACA, creation of an expert easement advisory board."

Click here to read the Entire IRSAC 2009 General Report and the 2009 six listed recommendations from the IRSAC made to the IRS.

Internal Revenue Service Advisory Council 2009 General Report	November 18, 2009	article

Prior News Links of Continuing Interest

The L'Enfant Trust is featured in Old House Journal Magazine	July, 2009	article
The L'Enfant Trust Awarded the 2009 Vision Award by The Commitee of 100 on the Federal City	June 2, 2009	article
Preservation Easements from the National Trust	February 28, 2008	link
Click Here for 2007 IRS Audit Report	June 5, 2007	jpg

Related Washington Post Links

Tax Break Turns Into Big Business By Joe Stephens, Washington Post Staff Writer	December 13, 2004	article
An Evolution in Historic Preservation Online graphic presentation By Joe Stephens, Washington Post Staff Writer	December 13, 2004	link
Loophole Pays Off on Upscale Buildings By Joe Stephens Washington, Post Staff Writer	December 12, 2004	article
Washington Post Editorial: A For-Profit Facade?	December 14, 2004	article

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