A limited liability company classified as a TEFRA partnership was not entitled to deduct the full fair market value of a conservation easement under Code Sec. 170. The Court of Appeals affirmed the Tax Court’s decision limiting the deduction to the partnership’s adjusted basis pursuant to Code Secs. 170(e)(1)(A) and 724(b), as the contributed property was inventory in the hands of the contributing partner.
The Tax Court determined that the land was reported as inventory by the partner and that any gain from its hypothetical sale would have been treated as ordinary income. Accordingly, the charitable deduction was limited to the adjusted basis under Code Sec. 170(e).
The Court of Appeals found that arguments challenging the applicability of Code Secs. 170(e) and 724(b) were not preserved for appellate review. It further concluded that the Tax Court did not clearly err in its factual findings regarding the property’s character, nor was there credible evidence warranting a shift in the burden of proof under Code Sec. 7491(a).
Unpublished opinion affirming, per curiam, a tax court opinion Dec. 62,239(M), T.C. Memo. 2023-82.
Glade Creek Partners, LLC, CA-11
