United States Tax Court

Agency decision

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164 T.C. No. 1

CAPITOL PLACES II OWNER, LLC, HISTORIC PRESERVATION

FUND 2014 LLC, A PARTNER OTHER THAN THE TAX MATTERS

PARTNER,

Petitioner

COMMISSIONER OF INTERNAL REVENUE,

Respondent

—————

Docket No. 16536-23.

Filed January 2, 2025.

—————

C, an LLC, donated to a historic preservation

organization an easement over the exterior of a building in

a registered historic district in Columbia, South Carolina.

Relying on a professional appraisal, C claimed a charitable

contribution deduction of $23,900,000 for a qualified

conservation contribution under I.R.C. § 170(h) on its 2014

tax return.

R examined C’s return and issued a notice of final

partnership

administrative

adjustment

(FPAA)

determining to disallow the charitable contribution

deduction. P, the notice partner of C, timely filed a petition

in this Court challenging the FPAA.

Held: P failed to establish that the building was a

“certified historic structure” as defined in I.R.C. § 170(h)(4)

because the building was not listed in the National

had not issued a certification of historic significance to the

Secretary of the Treasury.

Held, further, C failed to make a qualified

conservation contribution under I.R.C. § 170(h) because

Served 01/02/25

the easement deed did not demonstrate

conservation purpose under I.R.C. § 170(h).

valid

Held, further, C could not unilaterally alter or

amend the conservation purposes listed in the easement

deed after the fact.

—————

Sarah L. Ray, Frank Agostino, Michelle A. Levin, Sarah E. Green, and

Logan C. Abernathy, for petitioner.

David N. Stock, Joseph E. Nagy, Anita A. Gill, Sahir Rama, Mark J.

Miller, William M. Rowe, and Kathryn E. Kelly, for respondent.

OPINION

URDA, Judge: Capital Places II Owner, LLC (CPII), donated a

facade easement in December 2014 over the Manson Building

(Building), an early 20th-century design located in a historic district of

Columbia, South Carolina. De rigueur CPII claimed a hefty charitable

contribution deduction (more than $23 million) for agreeing not to touch

the exterior of this district standout, and the Commissioner called foul.

The Commissioner has moved for partial summary judgment,

arguing that the donation fails to qualify as a “qualified conservation

contribution” within the meaning of section 170(f)(3)(B)(iii) and (h)

because it was not “exclusively for conservation purposes” as required

by section 170(h)(1)(C). 1 The Commissioner contends that the easement

deed did not protect any of the conservation purposes recognized in the

Code, most specifically that the Building was not a “certified historic

structure” under section 170(h)(4)(C). We agree and will grant partial

summary judgment.

1 Unless otherwise indicated, statutory references are to the Internal Revenue

Code, Title 26 U.S.C. (I.R.C. or Code), in effect at all relevant times, regulation

references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all

relevant times, and Rule references are to the Tax Court Rules of Practice and

Procedure.

Background

The following facts are derived from the parties’ pleadings,

motion papers, and declarations and exhibits attached thereto. They

are stated solely for purposes of deciding the motion for partial summary

judgment and not as findings of fact in this case. See Sundstrand Corp.

v. Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17 F.3d 965 (7th

Cir. 1994). 2

The Building is a three-story classical revival masonry building

designed by James Urquhart, an architect prominent in early 20thcentury Columbia. Over the decades the Building went through its fair

share of alterations and remodeling, perhaps most prominently the

addition of a stucco facade to the top two floors in the 1960s. The early

2000s brought rehabilitation with a price: The removal of modern

surface material damaged the Building’s brick and flush stone

ornamentation.

In June 2000 the then owner of the Building submitted an

application to the National Park Service (NPS) to determine the

Building’s eligibility for listing on the National Register of Historic

Places (National Register). NPS denied the application on October 19,

2000, finding that the Building “does not appear to meet the criteria for

individual listing on the National Register” because it “has lost

important character-defining features” and “[m]any of the storefronts on

the first floor have also been altered.” After concluding that the Building

“does not qualify as a ‘certified historic structure,’” NPS further noted

that, while the building was not “within an existing registered historic

district or potentially eligible district,” it “could potentially contribute to

a historic distric” [sic] “[b]ecause of its scale and prominence.” According

to a declaration by Joy Beasley, the Keeper of the National Register, the

Building “is not individually listed in the National Register,” and NPS

“has no record of the . . . Building ever being individually listed in the

National Register.”

On September 5, 2014, the Historic Columbia Foundation,

assisted by South Carolina’s State Historic Preservation Officer,

submitted to the NPS Form 10-900, National Register of Historic Places

Registration Form, nominating the Columbia Commercial Historic

2 CPII is a limited liability company formed under the laws of the State of

South Carolina and is treated as a partnership subject to the Tax Equity and Fiscal

Responsibility Act of 1982, Pub. L. No. 97-248, §§ 401–407, 96 Stat. 324, 648–71.

District, in Columbia, South Carolina, for listing in the National

significance. The form listed a total of 54 commercial buildings within

the historic district, identifying 36, including the Building, as

“contributing” and 18 as “noncontributing.” The application was

approved, and the Columbia Commercial Historic District was listed in

the National Register on October 20, 2014. However, the Secretary of

the Interior was not asked to certify and did not certify that, in the words

of section 170(h)(4)(C), the Building is “of historic significance to the

district.”

On December 17, 2014, CPII (which had become owner of the

Building according to the well-practiced minuet oft seen in conservation

easement cases) recorded a historic preservation easement deed,

granting a facade easement over the Building to the Historic Columbia

Foundation. The deed stated “the Building was listed in the National

Columbia Commercial Historic District . . . and, as such, is a ‘certified

historic structure’ as defined under Section 170(h).” The grant was

“specifically limited to the Building Façade and the Development

Rights,” and the purpose was “to assure that the Building Façade will

be retained and maintained forever in its rehabilitated condition and

state exclusively for conservation and preservation purposes.” The

“Building Façade” was defined as “the Building’s entire exterior

including but not limited to the front, side and rear exterior walls,

height, roof, roof lines, color, building materials and windows.”

CPII filed a short-year 2014 income tax return covering the period

from December 4 through December 31, 2014, and claimed a charitable

contribution deduction related to its conservation easement donation.

The IRS disallowed the deduction and issued a notice of final

partnership administrative adjustment, alleging inter alia that the

alleged donation failed to satisfy the statutory and regulatory

requirements for a noncash charitable contribution deduction.

Discussion

Summary Judgment Standard

The purpose of summary judgment is to expedite litigation and

avoid costly, time-consuming, and unnecessary trials. Fla. Peach Corp.

v. Commissioner, 90 T.C. 678, 681 (1988). The Court may grant

summary judgment when there is no genuine dispute as to any material

fact and a decision may be rendered as a matter of law. Rule 121(a)(2);

Sundstrand Corp., 98 T.C. at 520.

In deciding whether to grant summary judgment, we construe

factual materials and draw inferences therefrom in the light most

favorable to the nonmoving party. Sundstrand Corp., 98 T.C. at 520.

The nonmoving party may not rest upon mere allegations or denials of

his pleadings but rather must set forth specific facts showing that there

is a genuine dispute for trial. Rule 121(d); see Sundstrand Corp., 98 T.C.

at 520.

II.

Legal Framework

Conservation Purposes

To claim a charitable contribution deduction for the donation of a

partial interest in property, such as an easement, the contribution must

be “exclusively for conservation purposes.” I.R.C. § 170(h)(1)(C). The

Code defines conservation purposes to include, as relevant here, “the

preservation of an historically important land area or a certified historic

structure.” See I.R.C. § 170(h)(4)(A)(iv). The term “certified historic

structure,” in turn, encompasses “(i) any building, structure, or land

area which is listed in the National Register” or “(ii) any building which

is located in a registered historic district (as defined in

section 47(c)(3)(B)[3]) and is certified by the Secretary of the Interior to

the Secretary as being of historic significance to the district.” I.R.C.

§ 170(h)(4)(C). 4

This wording largely tracks section 47(c)(3)(A), which defines a

“certified historic structure” for purposes of eligibility for the

3 Section 47(c)(3)(B) defines the term “registered historic district” to include

“any district listed in the National Register,” as well as any district that is both

(I) designated under a state or local statute that itself has been “certified by the

Secretary of the Interior to the Secretary as containing criteria which will substantially

achieve the purpose of preserving and rehabilitating buildings of historic significance

to the district” and (II) certified by the Secretary of the Interior to the Secretary as

meeting substantially all of the requirements for the listing of districts in the National

4 A building, structure, or land area must satisfy these prerequisites “either at

the time of the transfer or on the due date (including extensions) for filing the

transferor’s return . . . for the taxable year in which the transfer is made.” I.R.C.

§ 170(h)(4)(C) (flush language).

rehabilitation credit. 5 Like section 170(h)(4)(C), section 47(c)(3)(A)

employs the term “certified historic structure,” defining it to include a

building either (i) listed in the National Register or (ii) located in a

registered historic district and certified by the Secretary of the Interior

to the Secretary of the Treasury as being of historic significance to the

district. Section 47(c)(3)(A), as it is known now, was added first in the

Tax Reform Act of 1976, Pub. L. No. 94-455, § 2124, 90 Stat. 1520, 1916.

Congress then recycled nearly identical language, i.e., the “certified

historic structure” definition and certification framework, four years

later when enacting what became section 170(h)(4) as part of the Tax

Treatment Extension Act of 1980, Pub. L. No. 96-541, § 6(b), 94 Stat.

3204, 3207.

Regulatory Framework

The meaning of the term “certified historic structure” in

section 170(h)(4)(C) is patently linked to the National Register, which

dates from 1966. See National Historic Preservation Act, Pub. L. No. 89665, 80 Stat. 915 (1966). In that Act, Congress authorized the Secretary

of the Interior “to expand and maintain a national register [composed]

of districts, sites, buildings, structures, and objects significant in

American history, architecture, archeology, and culture.” Id. § 101(a)(1),

80 Stat. at 915. Among other things, the Act provided authority to

establish grant programs for states and the National Trust for Historic

Preservation, id. § 101(a)(2) and (3), and required federal agencies to

“take into account the effect of [any] undertaking on any [property] that

is included in the National Register,” id. § 106, 80 Stat. at 917. The Act

further directed the Secretary to establish criteria to guide state efforts

“for the preservation, acquisition, and development of such properties,”

id. § 101(a), and the President to “issue such regulations . . . as he deems

desirable” in order “to assure consistency in policies and actions under

this Act with other related Federal programs and activities,” id. § 104(b),

80 Stat. at 917.

Listing Regulations

To implement the purposes of the Act the Department of the

Interior (Interior) issued regulations defining, inter alia, the

mechanisms for nominations to the National Register, criteria for

evaluation, and the means of publication. 36 C.F.R. § 60.1–60.17 (1976).

5 We note that section 47(c)(3)(A) went through several numbering changes

over the years. We will refer to the current section numbering for purposes of clarity.

As described in the current version of the regulations, last revised in

1981, the “National Register was designed to be and is administered as

a planning tool,” and “[l]isting in the National Register” makes property

owners eligible for federal grants for historic preservation. 36 C.F.R.

§ 60.2(a) and (b) (1982). The regulations expressly recognize that taxrelated provisions might apply to properties listed in the National

depreciable historic structures, (2) discouraging destruction of historic

buildings by eliminating certain otherwise available federal tax

provisions, and (3) relating to charitable contributions for conservation

purposes of partial interest in historically important land areas or

structures. Id. para. (c).

During the period between 1976 and 1980 (when sections 47(c)(3)

and 170(h)(4) were added), the applicable regulations provided for

enlargement of the National Register by Act of Congress, declaration by

Secretary of the Interior, and nominations by states and federal agencies

that NPS subsequently approved. See 36 C.F.R. § 1202.2(d) (1980); 36

C.F.R. § 60.2(d) (1976). The regulations established a highly reticulated

scheme for processing and evaluating various types of potential listings,

as well as to account for changes to listed properties and the removal of

properties from the National Register. Nominations were to be made on

prescribed forms, see 36 C.F.R. § 1202.10 (1980); 36 C.F.R. § 60.10

(1976), and notice of such nominations was to be published in the

Federal Register, followed by a 15-day public comment period, see 36

C.F.R. § 1202.13(a) (1980); 36 C.F.R. § 60.13(a) (1976). The regulations

further provided that a notice of listing would be placed in the Federal

With minor modifications, the regulatory scheme in place during 1976

through 1980 continues to govern today.

Certification Regulations

In response to Congress’s assignment of authority to the

Secretary of the Interior to make various certifications related to the

National Register, Interior promulgated regulations governing the

certification process. 36 C.F.R. § 67.1 (1978). As most relevant here,

Interior outlined the procedures under the Tax Reform Act of 1976 “for

the following categories of certification: (1) That a structure is listed in

the National Register; (2) that a structure is located within a Registered

Historic District but is or is not of historic significance to such district.”

36 C.F.R. § 67.4(a) (1978).

As to listed structures, the regulation advises: “To determine

whether or not a property is individually listed in the National Register,

the owner should consult the listing of National Register properties in

the Federal Register (found in most large libraries).” 36 C.F.R.

§ 67.4(b)(1) (1978). This direction to consult the Federal Register (in a

large library) has remained in subsequent versions of the regulation,

including the current one. See, e.g., 36 C.F.R. § 67.4(b) (2011). The

regulations currently in effect note that “[s]ome properties individually

listed in the National Register include more than one building.” Id.

para. (d)(2). “In such cases, the owner must submit a single part 1

application,” and the Secretary of the Interior will “determin[e] which of

the buildings included within the listing are of historic significance to

the property.” Id.

As to the second category, the regulation provides that if an owner

of a property in a Registered Historic District “wishes the Secretary to

certify as to whether the structure is of historic significance to the

district, the owner must make written application,” providing specific

information listed in the regulation. 36 C.F.R. § 67.4(c) (1978). The

regulation further provided that Part I of a “Historic Preservation

Certification Application” shall be used in requesting an evaluation from

the Secretary. Id. para. (d). Although the procedures for routing the

application changed over time, the requirements of a written application

and the use of Part I of an “Historic Preservation Certification

Application” were constant through the years. See, e.g., 36 C.F.R.

§ 67.4(c) (2011).

Subsequent versions of these regulations expressly acknowledged

the passage of the Tax Treatment Extension Act of 1980, which tracked

in nearly identical text the structure and elements (including the

certification requirement for properties in Registered Historic Districts)

of the “certified historic structure” definition in the Tax Reform Act of

1976. See 36 C.F.R. § 67.1(a) (1984). Although certain nonsubstantive

changes have been made to the regulations, the preamble to the current

version expressly recognized that “Section 170(h) also designates the

Secretary of the Interior as the authority who receives applications and

issues certifications verifying to the Secretary of the Treasury that the

building or buildings contribute to the significance of a historic district.”

Historic Preservation Certifications for Federal Income Tax Incentives,

76 Fed. Reg. 30,539, 30,539 (May 26, 2011); see also Historic

Preservation Certifications Pursuant to Section 48(g) and Section 170(h)

of the Internal Revenue Code of 1986, 55 Fed. Reg. 6764, 6764 (Feb. 26,

1990) (“[Sections 48(g) and 170(h)] require certifications from the

Secretary of the Interior in order for taxpayers to receive tax benefits.

This rule establishes procedures whereby taxpayers apply for these

certifications.”).

III.

Analysis

Certified Historic Structure

Although we have previously encountered section 170(h)(4)(C),

see Gorra v. Commissioner, T.C. Memo. 2013-254; Herman v.

Commissioner, T.C. Memo. 2009-205, neither case presented the

occasion to analyze the requirements of this conservation purpose. We

do so now and conclude that the undisputed facts establish that the

Building did not meet either definition of “certified historic structure”

under section 170(h)(4)(C).

Listed in National Register

The first of these definitions provides that “any building,

structure, or land area which is listed in the National Register”

constitutes a “certified historic structure.” I.R.C. § 170(h)(4)(C)(i). The

Keeper of the National Register has unequivocally stated in a sworn

declaration that the Building “is not individually listed in the National

individually listed in the National Register.”

CPII nonetheless asserts that a genuine issue of material fact

exists as to whether the Building was in fact listed. CPII contends that

the phrase “listed in the National Register” should be read to include

anything and everything within the boundaries of a National Register

listing, based on a hodgepodge of documents from two Keepers of the

National Register, the South Carolina State Historic Preservation

Office, and the Federal Energy Regulatory Commission. Under CPII’s

interpretation, the Building was “listed in the National Register”

because it was within the boundaries of a historic district listed in the

National Register.

We first note that CPII is dressing up a legal challenge in fact

clothing in an attempt to sidestep summary judgment. The pertinent

facts are undisputed: The Building is not itself listed in the National

thus is not factual, but interpretive and amenable for resolution at this

stage.

To resolve the question before us, we pick up the trusty tools of

statutory interpretation, beginning “where all such inquiries must

begin: with the language of the statute itself.” United States v. Ron Pair

Enters., Inc., 489 U.S. 235, 241 (1989). Statutory interpretation focuses

on “the language itself, the specific context in which that language is

used, and the broader context of the statute as a whole.” Robinson v.

Shell Oil Co., 519 U.S. 337, 341 (1997); see also Fischer v. United States,

144 S. Ct. 2176, 2183 (2024). “[W]e must ‘give effect, if possible, to every

clause and word of [the] statute.’” Williams v. Taylor, 529 U.S. 362, 404

(2000) (quoting United States v. Menasche, 348 U.S. 528, 538–39 (1955)).

“It is a ‘fundamental canon of statutory construction’ that, ‘unless

otherwise defined, words will be interpreted as taking their ordinary,

contemporary, common meaning.’” Sandifer v. U.S. Steel Corp., 571

U.S. 220, 227 (2014) (quoting Perrin v. United States, 444 U.S. 37, 42

(1979)). The term “listed” is not defined in the statute, so we give the

term its ordinary meaning at the time of the enactment of section

170(h)(4). A contemporaneous dictionary defines the verb “list” as “1. To

make a list of; itemize. 2. To enter in a list; register or catalogue.” List,

American Heritage Dictionary of the English Language (1st ed. 1969).

We struggle to see how the Building can be “listed” where it plainly has

not been entered into the relevant list, i.e., the National Register.

Although CPII’s argument asks us to interpret “listed” to include

“resources within the boundaries of a listed properties,” the broader

statutory context blocks this reading. Section 170(h)(4)(C)(i) provides

that a “certified historic structure” includes “any building, structure, or

land area which is listed in the National Register,” while, under

clause (ii), the term includes “any building which is located in a

registered historic district (as defined in section 47(c)(3)(B)) and is

certified by the Secretary of the Interior to the Secretary as being of

historic significance to the district.” If a building is necessarily “listed

in the National Register” simply by being within the boundaries of a

property listed in the National Register, such as a registered historic

district, then section 170(h)(4)(C)(ii) has been rendered superfluous.

See, e.g., Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501 U.S. 104, 112

(1991) (finding that statutes should be read “so as to avoid rendering

superfluous any parts thereof”). 6

6 The current version of these regulations casts additional doubt on CPII’s

broad view of listing, providing that even in the case of an individually listed property

Interior’s regulations are further revealing both as to the

meaning of “listed” in the late 1970s and as to the established regulatory

backdrop to Congress’s decision to recycle precisely the same

terminology in 1980. In 1977 Interior promulgated regulations in

response to identical terms (“listed in the National Register”) and a

nearly identical statutory scheme, i.e., offering definitions of a “certified

historic structure” in a specific context. These regulations advised

owners to “consult the listing of National Register properties in the

Federal Register (found in most large libraries)” “[t]o determine whether

or not a property is individually listed,” 36 C.F.R. § 67.4 (1978), a

practice it continues today, see 36 C.F.R. § 67.4(b) (2011). This direction

makes sense only if one could actually find the relevant property in a

published list. Likewise, the regulatory provisions governing notice and

publication of nominations (triggering a public comment period) and

notice and publication of listings would serve little function under CPII’s

reading. See 36 C.F.R. § 1202.13 (1980); 36 C.F.R. § 60.13 (1976). Of

course, we presume Congress was aware of this existing listing and

certification regime when it decided to repeat the same wording in

section 170(h)(4)(C), and that it did so embracing the interpretation of

“listed in the National Register” that allows the regulatory regime to

function properly. See, e.g., Hall v. United States, 566 U.S. 506, 516

(2012) (“We assume that Congress is aware of existing law when it

passes legislation.” (quoting Miles v. Apex Marine Corp., 498 U.S. 19, 32

(1990))); see also Bragdon v. Abbott, 524 U.S. 624, 645 (1998) (“When

administrative and judicial interpretations have settled the meaning of

an existing statutory provision, repetition of the same language in a new

statute indicates, as a general matter, the intent to incorporate its

administrative and judicial interpretations as well.”); Lorillard v. Pons,

434 U.S. 575, 580–81 (1978).

In summary, the text and context of section 170(h)(4)(C)(i)

establishes that the phrase “listed in the National Register” refers to a

building, structure, or land area individually listed in the National

with more than one building, “the owner must submit a single part 1 application,” and

the Secretary of the Interior will “determin[e] which of the buildings included within

the listing are of historic significance to the property.” 36 C.F.R. § 67.4(d)(2) (2011).

7 CPII’s authorities are not relevant to our interpretation. None of these

authorities addresses section 170(h)(4)(C)(i) much less suggests that its general

observations about listing govern the specific context.

Certification of Historic Significance

The second definition encompasses “any building which is located

in a registered historic district (as defined in section 47(c)(3)(B)) and is

certified by the Secretary of the Interior to the Secretary as being of

historic significance to the district.” I.R.C. § 170(h)(4)(C)(ii) (emphasis

added). The undisputed facts before us conclusively establish that CPII

made no written application to the Secretary of the Interior to certify to

the Secretary of the Treasury the Building’s “historic significance” to the

district, see 36 C.F.R. § 67.4(c) (2011), and that, accordingly, no such

certification was made, a point confirmed by the Keeper of the National

CPII responds that the acceptance of a building as a resource

“contributing to” the historic district counts as a certification by the

Secretary of the Interior of the Building’s “historic significance to the

district” for purposes of section 170(h)(4)(C)(ii). We disagree. In 1976

Congress offered tax benefits to buildings located in a registered historic

district that were certified by the Secretary of the Interior to the

Secretary of the Treasury as having historic significance to the district.

In 1977 Interior explained how to obtain such a certification, requiring

a written application and use of a particular form. Congress recycled

the same certification element three years later, and we see no

indication that it wished to disturb or deviate from the certification

regime and requirements that Interior had established. We assume that

in some circumstances a building might conceivably qualify for a

certification of “historic significance” because it is a resource

“contributing to” a registered historic district, but CPII plainly did not

obtain such a “historic significance” certification for the Building, which

is fatal to CPII’s claim. 8

Conclusion

CPII fails to establish that the Building satisfies the definitions

of “certified historic structure” enshrined in section 170(h)(4)(C).

Consequently, the preservation of the Building does not count as a

conservation purpose that can support a charitable contribution

deduction of a partial interest in property.

8 CPII makes a half-hearted argument that 36 C.F.R. § 67.4 does not apply to

section 170(h)(4)(C)(ii) given certain revisions in 2011. The 2011 preamble firmly

refutes that point and makes clear that any changes were technical, not substantive.

Alternative Argument

CPII argues, in the alternative, that even if the Building does not

constitute a “certified historic structure,” the easement deed nonetheless

contains a valid conservation purpose in that its restrictions protect a

“historically important land area” under section 170(h)(4)(A)(iv).

Generally, we consider only those purposes stated in an easement deed

when determining whether an easement is “exclusively for conservation

purposes.” Mill Road 36 Henry, LLC v. Commissioner, T.C. Memo. 2023129, at *30; Murphy v. Commissioner, T.C. Memo. 2023-72, at *42–43.

This approach comports with the rule of construction under governing

state law (South Carolina) that “[t]he intention of the grantor [of the

easement] must be found within the four corners of the deed.” Windham

v. Riddle, 672 S.E.2d 578, 583 (S.C. 2009) (quoting Gardner v. Mozingo,

358 S.E.2d 390, 392 (S.C. 1987)).

It is also consistent with the centrality of conservation purpose in

the statutory regime: Congress grants a tax deduction to a property

owner that enters into an enforceable contract with a qualifying

charitable organization to relinquish certain property rights in exchange

for a binding commitment from the organization that it will protect a

specified conservation purpose—including against the property owner—

forever. Murphy, T.C. Memo. 2023-72, at *42. Defining with precision

the conservation purpose is a crucial element for both of the contracting

parties, establishing for the owner the scope of the rights being

relinquished and for the charity what it has sworn to safeguard. One

party cannot change the bargain that was struck (by, for example,

unilaterally modifying an agreed-upon conservation purpose) to suit its

own benefit. Accord Turner v. Commissioner, 126 T.C. 299, 311 (2006)

(“A restriction granted in perpetuity on the use of the property must be

based upon legally enforceable restrictions (such as by recording the

deed) that will prevent uses of the retained interest in the property that

are inconsistent with the conservation purpose of the contribution.”

(Emphasis added.)); see also Treas. Reg. § 1.170A-14(g)(1).

CPII argues that a factual question remains as to the parties’

intent that precludes summary judgment. The easement deed here

leaves no doubt as to its purpose:

The purposes of the Easement and this Agreement are to

assure that the Building Façade will be retained and

maintained forever in its rehabilitated condition and state

exclusively for conservation and preservation purposes, for

the scenic, cultural and historic enjoyment of the general

public, and to prevent any use or change of the Building

Façade or the air space on the Property directly above or

adjacent to the Building that is inconsistent with the

historical character of the Building Façade.

The deed highlights its limited scope in its very next section, stating

“[t]he grant of the Easement is specifically limited to the Building

Façade and the Development Rights, and the Grantee shall not be

deemed to possess any easement over or right in any other portion of the

Property except as specifically set forth in this Agreement.” On its face,

the easement deed preserves a building, not a historically important

land area.

CPII parries that preservation of the Building counts as

preservation of a historically important land area. It reaches this

counterintuitive conclusion on the basis of Treasury Regulation

§ 1.170A-14(d)(5)(ii)(B), which provides that a historically important

land area can include “[a]ny land area within a registered historic

district including any buildings on the land area that can reasonably be

considered as contributing to the significance of the district.” In

attempting to apply this regulation CPII misreads section

170(h)(4)(A)(iv) in an effort to avoid the requirements of section

170(h)(4)(C). To satisfy the conservation purpose of protecting a

historically important land area, there must be a land area that is

protected. See Turner, 126 T.C. at 314–17. A single façade easement

protecting a single building is insufficient.

Moreover CPII’s interpretation runs afoul of the rule of statutory

construction that “the specific terms of a statutory scheme govern the

general ones.” D.B. v. Cardall, 826 F.3d 721, 735 (4th Cir. 2016). “The

general-specific rule is particularly applicable where ‘Congress has

enacted a comprehensive scheme and has deliberately targeted specific

problems with specific solutions.’” Id. (quoting RadLAX Gateway Hotel,

LLC v. Amalgamated Bank, 566 U.S. 639, 645 (2012)). Congress here

established both “historically important land areas” and “certified

historic structures” as qualifying conservation purposes but went on to

add detailed definitions for the latter. CPII’s expansive reading of

“historically important land area” would swallow the more specific

definition of “certified historic structure” and thus is to be avoided. See

RadLAX, 566 U.S. at 645 (noting that the canon has “full application . . .

to statutes . . . in which a general authorization and a more limited,

specific authorization exist side-by-side,” avoiding “the superfluity of a

specific provision that is swallowed by the general one”). In short, “[t]he

terms of the specific authorization must be complied with,” id., and

CPII’s attempted end-run falls short of the goal line.

IV.

Conclusion

CPII fails to establish that the easement protects any

conservation purpose recognized in section 170(h)(4). We accordingly

conclude that it has failed to satisfy the necessary requirements to claim

a charitable contribution deduction for the donation at issue.

To reflect the foregoing,

An appropriate order will be issued.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.