Conservation Deed Amendment Clauses May Be Permissible

Date01 June 2020
Published date01 June 2020
June 2020 7
Bruce R. Hopkins’ Nonpr ofit Counsel DOI:10.10 02/n pc
Clinic Brief
The clinic’s position rested heavily on the proposition
that it is indeed educational in nature. It characterizes
the US argument as meaning that, for federal tax pur-
poses, “an organization can be only medical or only edu-
cational; if it is both, it is ‘primarily’ neither.” As the clinic
sees it, “as part of its extensive educational activities, it
provides medical care and conducts medical research.”
The clinic, it is said, “specializes in education, research,
and patient care” — “[e]ach is a substantial function,
even if none predominates.”
The clinic, the brief reports, “operates five world-re-
nowned graduate medical schools, accredited by multi-
ple agencies, that offer M.D., Ph.D., and other degrees,
as well as residencies, fellowships, and continuing med-
ical education.” It has a “formal academic governance
structure, education committees, and determines the
schools’ faculty, programs, and curricula.” These and
other “undisputed attributes show that, at minimum,
education is one of [the clinic’s] primary functions.”
Other arguments are that the district court correctly
applied statutory construction canons, the references by
the US to other Code provisions are a mere “distraction,”
the statute involved is unambiguous and thus the regula-
tion’s history is not relevant, the fact that a regulation is of
long standing does not relieve a court of the responsibility
to determine its validity, congressional silence in the face of
a regulation is not a useful indicator of a statute’s mean-
ing, the US’s argument as to the meaning of the word
educational is newly offered on appeal and thus should be
rejected, and the statute is unambiguous and therefore the
appellate court should inquire no further. [4.4]
Commentary: On briefs, the US prevails. The govern-
ment’s brief includes an analogy that, in a nonlegal way,
sums up this case. It is that if a statute makes reference
to a green car, a white car with a green stripe does not
The purpose of a nonprofit membership organization
is to provide a forum for the exchange of information
to educate and render assistance to users and potential
users of a particular software application. The members
are employees of businesses in a region that use this
software. Members receive training on the software.
Information collected during membership meetings is
shared with the software developers to enable them to
better understand the needs of users of the app.
The IRS ruled that this entity failed to qualify as an
exempt business league because it is not organized and
operated to benefit an industry as a whole or improve
the business conditions of an industry but only to
benefit the segment of a line of business (Priv. Ltr. Rul.
202013016). [14.2(a)]
The IRS Chief Counsel, by advice memorandum
dated March 17, held that the fact that a conservation
easement deed includes an amendment clause does
not “necessarily” cause the easement arrangement to
fail to satisfy the gift deductibility rules (IRC § 170(h))
(CCAM 2020-001). The memorandum states that these
amendment clauses must be subjected to a case-by-case
analysis, considering the “context of the deed as a whole
and the surrounding facts and circumstances.”
A prototype compliant amendment provision is sup-
plied. It allows the easement deed to be amended
to “enhance” the property’s “conservation values” or
add real property subject to the deed’s restrictions. The
amendment may not, however, cause certain outcomes,
such as change the conservation purposes involved, affect
the easement’s perpetual duration, affect the status of
the easement as a qualified conservation contribution,
or “reduce the protection of the conservation values.”
The US Tax Court, by decision dated April 7, held
that a claimed charitable deduction for a gift of a set
of new designer eyeglass frames was properly disal-
lowed in its entirety by the IRS, principally because the
appraisal involved was not a qualified one (Campbell v.
Pursuant to an eyewear charitable contribution
program, a company consolidated 349,629 designer
eyeglass frames into units of 3,432 and sold them for
$50,000 per unit. This promotion ostensibly enabled
each buyer to contribute, following a one-year holding
period, his or her unit of frames to a public charity, claim-
ing a charitable contribution deduction at the appraised
fair market value at the time of the gift. An offering
memorandum summarizing this promotion stated that
that value would be $225,596.
The appraiser opined, using the market approach
valuation method and a markup of the wholesale prices
of 35 percent, that the fair market value of the “donated
property” was $11,266,115.

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