Right to Swap Easements Violates Perpetuity Requirement and Eliminates Deduction.

The petitioner purchased a 410-acre tract and developed a residential community and golf course.  Later, the petitioner donated a conservation easement on the golf course and claimed an associated income tax deduction of $10.5 million.  The easement agreement allowed the petitioner to swap the land subject to the easement for an equal or greater amount of contiguous land so long as the substitute property met certain conditions.  The Tax Court held that swap right violated the perpetuity requirement of I.R.C. Sec. 170(h)(2)(C).  On appeal, the court affirmed.  The appellate court noted that the restriction on "the real property" as required by statute was not perpetual because it was not tied to a specific tract in perpetuity.  By having the ability to substitute property under the easement restriction, the court noted that the petitioner could obliviate the appraisal to serve as the verification of the value of the restricted property and the condition of the property.  A "savings clause" in the easement agreement which would void the swapping right if a court found that it violated I.R.C. Sec. 170, was also of no effect because it would have, in essence, rewritten the easement in response to the court's holding.  Belk v. Comr., No. 13-2161, 2014 U.S. App. LEXIS 23680 (4th Cir. Dec. 16, 2014), aff'g., 140 T.C. 1 (2013). 

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