I won’t get into the substantive requirements that the particular easement failed to satisfy, but basically the description of the transfer flunked the regulations requirement that, if the easement is later extinguished, the donee receive a proportionate share of the extinguishment proceeds.
I do want to present the Tax Court’s rejection of what I would call a tax saving clause intended to solve the problem of a disqualifying condition by retroactively eliminating the condition through interpretation or construction. The Court’s discussion of that issue is in outline paragraph V.C. at pp. 16-19 of the Slip Op. The Court’s holding is crisp, so I will just quote it:
C. “Construction of Terms”
Article VI.D of the deed provides that the deed “shall be construed to promote * * * the conservation purposes of this Conservation Easement, including such purposes as are defined in Section 170(h)(4)(A)”. See supra pp. 5-6. Petitioner insists on the importance of part D, criticizes the Commissioner for failing to include it in his memorandum, and quotes part D with this portion underlined:
Any general rule of construction to the contrary notwithstanding, this Conservation Easement shall be liberally construed in favor of the grant to protect the Conservation Values and effect the policies and purposes of SERLC. If any provision of this Conservation Easement is found to be ambiguous, an interpretation consistent with its conservation purposes that would render the provision valid should be favored over any interpretation that would render it invalid. * * *
However, petitioner does not explain how this provision should affect our interpretation of the extinguishment provision and does not give any other commentary on this provision. In fact, part D of article VI of the deed has no effect on the outcome of this case.
