L'Enfant Trust Donors are Unaffected by U.S. Tax Court Ruling in Kaufman

On April 26, 2010, in Kaufman v. Commissioner (134 T.C. No. 9), the United States Tax Court ruled that a facade easement given to the National Architectural Trust ("NAT," now renamed "Trust for Architectural Easements") was not entitled to a charitable contribution deduction.  At issue in Kaufman was whether the donor gave NAT sufficient ownership rights over the property’s mortgage holder to make the easement run “in perpetuity” as required for a tax deduction under the tax code.  Based on the specific language of the deed at issue there, the Court concluded that the mortgage holder had not sufficiently subordinated its rights to NAT at the time of the donation.

The standard L’Enfant Trust deed is different from the deed at issue in Kaufman in key respects, including with respect to mortgage holder subordination.  As a result, the reasoning of the Kaufman case does not apply to The L’Enfant Trust’s donors.  In fact, in Simmons v. Commissioner, the United States Tax Court reviewed The L’Enfant Trust’s subordination form and concluded that the form satisfied the tax code’s perpetuity requirement.  See our website tab "You Should Care Who Holds Your Easement" in the "About the Easement Program" section.