T.C. Memo. 2011-71



                      UNITED STATES TAX COURT



         RANDALL A. AND KELLY C. SCHRIMSHER, Petitioners v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 945-09.                  Filed March 28, 2011.



     William J. Bryant and Gwendolyn Denoux Skinner, for

petitioners.

     Robert W. Dillard and Jeffrey S. Luechtefeld, for

respondent.



                          MEMORANDUM OPINION


     THORNTON, Judge:     This matter is before us on respondent’s

motion for partial summary judgment filed pursuant to Rule 121.1


     1
      All Rule references are to the Tax Court Rules of Practice
                                                   (continued...)
                               - 2 -

Respondent determined deficiencies and penalties with respect to

petitioners’ Federal income taxes for 2004 through 2006 as

follows:

                                                Penalty
         Year           Deficiency           Sec. 6662(h)1

         2004            $54,091                $21,636
         2005             60,686                 24,274
         2006             42,253                 16,901
     1
      In the notice of deficiency respondent determined that
petitioners are liable for the penalties listed above pursuant to
sec. 6662(h), which imposes a 40-percent penalty for gross
valuation misstatements. Respondent determined alternatively
that petitioners are liable for 20-percent accuracy-related
penalties pursuant to sec. 6662(a) for substantial
understatements of income tax, valuation misstatements, and
negligence or disregard of rules or regulations. Respondent’s
motion for partial summary judgment states that if the Court
determines that petitioners have an underpayment because they
failed to meet the sec. 170 substantiation requirements, rather
than because they overvalued the facade easement, the 40-percent
penalty under sec. 6662(h) will not apply and that petitioners’
penalties under sec. 6662(a) will be $10,818, $12,137, and $8,450
for the years 2004, 2005, and 2006, respectively. Respondent
does not seek summary judgment as to any penalty.

The deficiencies arise largely from respondent’s disallowance of

deductions that petitioners claimed for a charitable contribution

of a facade easement.   In his motion for partial summary judgment

respondent contends that the deductions were not properly

substantiated under section 170.




     1
      (...continued)
and Procedure, and all section references are to the Internal
Revenue Code (Code) for the taxable years at issue.
                                - 3 -

                             Background

     The following facts are not in dispute.    On December 30,

2004, Randall A. Schrimsher (petitioner) executed a document

entitled “Preservation and Conservation Easement Agreement” (the

agreement) granting a facade easement to the Alabama Historical

Commission (the commission).    The facade easement is with respect

to property in Huntsville, Alabama, commonly known as the “Times

Building”.   The agreement states in relevant part:

     for and in consideration of the sum of TEN DOLLARS,
     plus other good and valuable consideration, the receipt
     and sufficiency of which are hereby acknowledged, the
     Grantor [petitioner] does hereby irrevocably GRANT,
     BARGAIN, SELL, AND CONVEY unto the Grantee [the
     commission], its successors and assigns, a preservation
     and conservation easement to have and hold in
     perpetuity * * *.

The agreement also includes a clause (the merger clause) stating

that “This agreement sets forth the entire agreement of the

parties with respect to the Easement and supercedes all prior

discussions, negotiations, understanding, or agreements relating

to the Easement, all of which are merged herein.”     The agreement

states that in the event of any dispute or question arising in

connection with the agreement, the laws and regulations of the

State of Alabama shall apply.

     On Form 8283, Noncash Charitable Contributions, attached to

their 2004 joint Federal income tax return, petitioners listed

the appraised fair market value of the facade easement as

$705,000.    Petitioners’ “Appraisal Summary” on the Form 8283
                               - 4 -

omitted various required items of information; in addition, it

was not signed or dated by the donor, the appraiser, or any

representative of the donee.   Petitioners did not attach to their

tax return any written appraisal of the facade easement.

     After applying the limitations of section 170(b) for 2004,

petitioners deducted $193,180 as a noncash charitable

contribution with respect to the facade easement.   For 2005 and

2006 they claimed charitable contribution carryover deductions of

$206,699 and $120,724, respectively, with respect to the

contribution of the facade easement.

     In the notice of deficiency respondent disallowed any

charitable contribution deduction for the facade easement on the

alternative grounds that petitioners had failed to satisfy the

section 170 substantiation requirements and had failed to

establish the easement’s value to be $705,000.   Petitioners,

residing in Alabama, petitioned this Court.

                            Discussion

     The Court may grant summary judgment if there is no genuine

issue of any material fact and a decision may be rendered as a

matter of law.   Rule 121(a) and (b); see Sundstrand Corp. v.

Commissioner, 

, 520 (1992), affd. 

(7th

Cir. 1994); Zaentz v. Commissioner, 

, 754 (1988).     As

the party seeking partial summary judgment, respondent has the

burden of showing that there is no genuine issue as to any
                                - 5 -

material fact and that a decision may be rendered as a matter of

law.    Rule 121(b); see Celotex Corp. v. Catrett, 

,

323 (1986) (interpreting analogous provisions of rule 56 of the

Federal Rules of Civil Procedure); Naftel v. Commissioner, 

, 529 (1985).    Respondent need not, however, negate with

evidence every allegation made by petitioners; he may carry his

burden with a “showing” that there is an absence of evidence to

support the nonmoving party’s case.     Celotex Corp. v. Catrett,

supra at 325.    Once the opposing party presents evidence

sufficient to support its claims, we must draw all factual

inferences in favor of the opposing party.     Dahlstrom v.

Commissioner, 

, 821 (1985); Jacklin v. Commissioner,

, 344 (1982).

A.   Respondent’s Alternative Contentions

       Respondent seeks summary judgment that the disputed

deductions should be disallowed because petitioners failed to

obtain a contemporaneous written acknowledgment of the facade

easement from the commission as required by section 170(f)(8).

Alternatively, respondent seeks summary judgment that the

disputed deductions should be disallowed because petitioners

failed to satisfy the requirements of section 170(f)(11) in that

they failed to obtain a qualified appraisal and attach it to

their Federal income tax return.
                                  - 6 -

B.   Contemporaneous Written Acknowledgment

      As a general rule, a charitable contribution of $250 or more

must be substantiated with a contemporaneous written

acknowledgment from the donee organization.2   Sec. 170(f)(8)(A).

The contemporaneous written acknowledgment “need not take any

particular form.   Thus, for example, acknowledgments may be made

by letter, postcard, or computer-generated forms.”     H. Conf.

Rept. 103-213, at 565 n.32 (1993), 1993-3 C.B. 393, 443.     The

contemporaneous written acknowledgment must include this

information:

           (i) The amount of cash and a description (but not
      value) of any property other than cash contributed.

           (ii) Whether the donee organization provided any
      goods or services in consideration, in whole or in
      part, for any property described in clause (i).

           (iii) A description and good faith estimate of the
      value of any goods or services referred to in clause
      (ii) * * * .

           [Sec. 170(f)(8)(B).]

      Petitioners contend that the agreement constitutes a

contemporaneous written acknowledgment within the meaning of

section 170(f)(8).   Respondent does not dispute that the

agreement is an “acknowledgment” or that it was

“contemporaneous”.   But he contends that the agreement fails

section 170(f)(8)(B)(ii) because it does not state whether the


      2
      As discussed infra, this requirement is subject to
exceptions contained in sec. 170(f)(8)(D) and (E).
                               - 7 -

commission provided any goods or services in consideration for

the facade easement.   Respondent acknowledges that the agreement

expressly states that the commission provided consideration for

the facade easement of “TEN DOLLARS, plus other good and valuable

consideration”.   Respondent suggests, however, that this language

should be disregarded, asserting that it is “typical

‘boilerplate’”.

     Without expressly alluding to the language that respondent

has termed boilerplate, petitioners argue that the “clear and

unambiguous” merger clause signifies that the agreement was the

“entire agreement”, and consequently “it is apparent” that no

cash or compensation was exchanged between petitioners and the

commission.   Thus, petitioners seem to suggest that the

consideration recited in the deed ($10 plus other good and

valuable consideration) was fictitious.   And indeed it might have

been.3


     3
      Over a century ago one court commented upon the apparently
durable practice of reciting nominal monetary consideration in
deeds:

     The popular idea is that there must be a money
     consideration expressed in all deeds, to render them
     valid. As a general rule, deeds which appear upon
     their face to be founded upon love and affection and a
     small money consideration are intended by the parties
     as gifts, as the money consideration is rarely ever
     paid or intended to be paid. While it is well known to
     the profession that it is not essential to the validity
     of a deed of gift to express therein a money
     consideration, still to satisfy the popular belief it
                                                    (continued...)
                              - 8 -

     But even if the commission actually provided no

consideration for the contribution, the written acknowledgment

must say so in order to satisfy the requirement of section



     3
      (...continued)
     is the almost universal practice to state a small sum
     of money as a part of the consideration in such a deed.
     The learned lawyer who was the immediate predecessor of
     the present Chief Justice of this court, in drawing a
     deed of gift which was to be executed by himself, once
     expressed the consideration of the same to be love and
     affection and “the fictitious dollar of the law.” He
     thus yielded to the popular belief and at the same time
     indicated by the language used that it was not
     essential to the validity of the deed that it should be
     founded upon anything else than simply a good
     consideration. * * * [Martin v. White, 

,
     282 (Ga. 1902).]

     Under Alabama law, to the extent a recitation of
indeterminate “valuable” consideration has operative effect, it
would appear to relate more to a deed of bargain and sale than to
a deed of gift. As the Alabama Supreme Court explained in
Houston v. Blackman, 

, 561-562 (1880):

     In deeds of bargain and sale, the expression of any,
     the slightest consideration--for instance, a pepper-
     corn even--will support them, as between the parties.
     The only use and operation of the expression of a
     consideration, or the introduction of a clause reciting
     a consideration, is to prevent a resulting trust to the
     grantor, and to estop him from denying the making and
     effect of the deed for the uses therein declared.
     * * *

     One possible effect of reciting “other valuable
consideration” in a deed of bargain and sale may be, in the event
the transferor’s creditors later challenge the transfer, to
permit parol evidence as to the existence of adequate pecuniary
consideration. See id.; see also Taylor v. Jones, 

, 605 (Ala. 1970) (holding that a deed’s stated consideration
of “the sum of one dollar and other good and valuable
consideration” was sufficient to support conveyances of real
property).
                                - 9 -

170(f)(8)(B)(ii).    See Friedman v. Commissioner, T.C. Memo. 2010-

45.   As the legislative history notes:   “If the donee

organization provided no goods or services to the taxpayer in

consideration of the taxpayer’s contribution, the written

substantiation is required to include a statement to that

effect.”    H. Conf. Rept. 103-213, supra at 565 n.30, 1993-3 C.B.

at 443.

      The only statement in the agreement concerning consideration

is the statement that the commission provided consideration of

$10 plus other good and valuable consideration.    Whether or not

it be considered boilerplate and whether or not it be considered

in conjunction with the merger clause, this statement does not

indicate that the commission provided no goods or services.      And

if the statement be construed literally to mean that the

commission provided the stated consideration, then the agreement

fails the requirement of section 170(f)(8)(B)(iii) since it does

not include a description and good faith estimate of the “other

good and valuable consideration”.

      Consequently, we agree with respondent that the agreement

does not satisfy the requirements of section 170(f)(8)(B)(ii) and

(iii).    The parties have not addressed whether any statutory

exception might render the section 170(f)(8)(A) requirement of a

contemporaneous written acknowledgment inapplicable to the

transaction in question.    More particularly, section 170(f)(8)(D)
                              - 10 -

provides that the requirement of a contemporaneous written

acknowledgment does not apply if the donee organization files a

return, on a form and in the manner regulations may prescribe,

that includes the information otherwise required to be included

in the contemporaneous written acknowledgment.    In addition,

section 170(f)(8)(E) authorizes regulatory exceptions, in

appropriate cases, to “some or all” of the requirements of

section 170(f)(8).   Pursuant to this authority, the regulations

provide that goods and services “are disregarded” for purposes of

section 170(f)(8) if they have “insubstantial value” under

guidelines provided in Rev. Proc. 90-12, 1990-1 C.B. 471, and

Rev. Proc. 92-49, 1992-1 C.B. 987, and any successor documents.4

Sec. 1.170A-13(f)(8)(i)(A), Income Tax Regs.

     Petitioners bear the burden of substantiating their

charitable contribution deductions.    See Rule 142(a).5   Neither

     4
      As relevant here, these guidelines generally provide that
benefits received in connection with a payment to a charity will
be considered to have insubstantial value if these two
requirements are met: (1) The payment must occur in the context
of a fundraising campaign in which the charity informs patrons
how much of their payment is a deductible contribution; and (2)
either (a) the fair market value of all of the benefits received
is the lesser of 2 percent of the donor’s payment or (for tax
years beginning in 2004) $82, or (b) the payment is (for tax
years beginning in 2004) $41 or more and the only benefits
received are “token items”. Rev. Proc. 90-12, sec. 3.01, 1990-1
C.B. 471, 472; Rev. Proc. 2003-85, sec. 3.22(2), 2003-2 C.B.
1184, 1189.
     5
      Petitioners do not contend that the issue of their
compliance (or noncompliance) with the sec. 170(f)(8)
substantiation requirements constitutes a “new matter” so as to
place the burden of proof upon respondent pursuant to Rule
                                                   (continued...)
                              - 11 -

in their petition nor in any other fashion in these proceedings

have petitioners raised any issue as to the applicability of any

exception to the contemporaneous written acknowledgment

requirement of section 170(f)(8).   We deem petitioners to have

waived any such issue.

C.   Conclusion

      For the reasons explained above, we conclude and hold that

there is no genuine issue as to any material fact and that a

decision may be rendered as a matter of law disallowing the

disputed deductions for petitioners’ failure to obtain a

contemporaneous written acknowledgment of the facade easement.

In the light of this conclusion, it is unnecessary to address

respondent’s alternative contention that petitioners failed to

satisfy the requirements of section 170(f)(11).   Accordingly,


                                    An appropriate order will be

                               issued granting respondent’s motion

                               for partial summary judgment.




      5
      (...continued)
142(a)(1). In certain circumstances, sec. 7491(a) may operate to
shift to the Commissioner the burden of proof with respect to any
factual issue relevant to ascertaining the taxpayer’s tax
liability. As one precondition for shifting the burden of proof,
however, the taxpayer must have complied with Code requirements
to substantiate any item. Sec. 7491(a)(2)(A). Since the
question before us is whether petitioners have complied with the
substantiation requirements of sec. 170(f)(8), the burden of
proof remains with them as to this issue.