CCA 200848076: Defective conservation easement acknowledgment bars the deduction

Plain-English summary

Chief Counsel advised that a charitable deduction of $250 or more for a conservation easement requires a contemporaneous written acknowledgment from the donee. The writing must describe the contributed property, state whether the donee provided goods or services, and give a good-faith value estimate if it did. Cash counts as goods or services for this rule. An instrument that merely documents a sale and omits the goods-or-services statement is not sufficient. The taxpayer must receive a compliant acknowledgment by the earlier of filing the original return or its due date, including extensions, and cannot cure a defect later to obtain a full or partial deduction.

Ruling snapshot

• Question: What must a contemporaneous written acknowledgment contain and when must it be received for a conservation easement deduction?
• Outcome: Advice given. A sale document lacking the required contribution and consideration statements is insufficient, and a late cure cannot preserve any deduction.
• Key authorities: IRC § 170(f)(8); Treas. Reg. § 1.170A-13(f); Addis v. Commissioner, 374 F.3d 881 (9th Cir. 2004).

Full text (IRS public release)

ID: CCA_2008082713405950 Number: 200848076
Office: ----------------
Release Date: 11/28/2008

UILC: 170.18-00

From: ---------------
Sent: Wednesday, August 27, 2008 1:41:01 PM
To: ---------------
Cc: --------------------------------------------------------------------- Subject: Conservation easement case

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No deduction is allowed under § 170(a) for a qualified charitable contribution (including a qualified conservation contribution) of $250 or more unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgment of the contribution by the donee organization. IRC § 170(f)(8)(A). If an acknowledgment fails to contain the required information or the taxpayer fails to receive the acknowledgment within the required time, § 170(f)(8)(A) is clear that no deduction under § 170 is allowed (i.e., taxpayers may not cure the defect after the fact and receive a whole or partial deduction). See, e.g., Addis v. Commissioner, 374 F.3d 881, 887 (9th Cir. 2004) (consequence of acknowledgment that did not contain required information is total denial of deduction; partial deduction foreclosed by statute), affg. 118 T.C. 528 (2002).

Content of acknowledgment. A contemporaneous written acknowledgment with respect to the contribution of a conservation easement to a donee organization must include the following information:

1. a description (but not necessarily the value) of the property contributed;

2. whether the donee organization provided any goods or services in consideration, in whole or in part,
   for the contributed property; and

3. if goods or services were provided in consideration for the contributed property, a good faith
   estimate of the value of such goods or services. IRC § 170(f)(8)(B); Reg. § 1.170A-13(f)(2).

"Goods or services" includes cash. Reg. § 1.170A-13(f)(5).

Timing of acknowledgment. The acknowledgment required under § 170(f)(8)(A) is considered to be "contemporaneous" if the taxpayer obtains the acknowledgment on or before the earlier of--

1. the date on which the taxpayer files a return for the taxable year in which the contribution was
   made, or

2. the due date (including extensions) for filing such return. IRC § 170(f)(8)(C); Reg. § 1.170A-13(f)(3).

A writing that: (1) does not acknowledge a contribution of property but, instead, merely evidences a sale of the property (regardless of the actual value of the property) and (2) does not include a statement of whether any goods or services have been provided for the contribution is not a contemporaneous written acknowledgment under § 170(f)(8). A writing that does contain the required information under § 170(f)(8)(B) must be received by the taxpayer before the taxpayer files its original return for the taxable 2

year in which the contribution was made (or the due date, including extensions, for filing that return -- whichever is earlier).

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