A partnership’s $64-million deduction for the contribution of a façade easement to a historic trust was properly disallowed because the partnership did not have a contemporaneous written acknowledgment (CWA) from the donee organization as required by Code Sec. 170(f)(8)(A). The letter sent by the donee organization to the taxpayer did not qualify as a CWA because it failed to state whether the donee supplied the donor with any goods or services in consideration for the gift. Moreover, although the donee organization filed an amended Form 990 that included the required information after the case was docketed, Code Sec. 170(f)(8)(D) is not self-executing in the absence of regulations. Therefore, the general rule requiring a CWA was applicable to the gift.
Comment. The Treasury secretary has declined to issue such regulations. In September 2015, the Treasury and the IRS proposed regulations (NPRM REG-138344-13) that would implement the exception from the CWA requirement under Code Sec. 170(f)(8)(D). The proposals would have required donee organizations to report the name, address and TIN of each covered donor. The proposals were withdrawn after the IRS received over 38,000 comments, many of which raised privacy and identity theft concerns.
The Tax Court rejected the partnership’s argument that the trust’s amended Form 990, which included the same information as a CWA, complied with Code Sec. 170(f)(8)(D). When Congress enacted Code Sec. 170(f)(8), the requirement that charities file annual information returns on Form 990 was well established. If Congress had intended to refer to the preexisting regulations, it would not have used the phrase “in accordance with such regulations as the Secretary may prescribe.” Therefore, the word “regulations” in subparagraph (D) referred to regulations that the Treasury Secretary might in the future promulgate under Code Sec. 170(f)(8) that would specify the appropriate procedure for reporting by donee organizations. Congress plainly understood that donee reporting raised serious policy questions concerning the form and manner of such reporting that the Treasury Secretary would need to address before donee reporting could be implemented.
Comment. This opinion was accompanied by concurring and dissenting opinions. The dissenters would have held subparagraph D self-executing.
15 West 17th Street LLC, 147 TC —, No. 19, Dec. 60,766
Code Sec. 170
CCH Reference – 2016FED ¶11,700.50
CCH Reference – 2016FED ¶11,620.6803
Tax Research Consultant
CCH Reference – TRC INDIV: 51,454.10CCH Reference – TRC INDIV: 51,454.15