Tax Court Explores Qualified Appraisals

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Matthew L. Roberts

Matthew L. Roberts



Mr. Roberts is a Principal of the firm. He devotes a substantial portion of his legal practice to helping his clients successfully navigate and resolve their federal tax disputes, either administratively, or, if necessary, through litigation. As a trusted advisor he has provided legal advice and counsel to hundreds of clients, including individuals and entrepreneurs, non-profits, trusts and estates, partnerships, and corporations.

Having served nearly three years as an attorney-advisor to the Chief Judge of the United States Tax Court in Washington, D.C., Mr. Roberts leverages his unique insight into government processes to offer his clients creative, innovative, and cost-effective solutions to their tax problems. In private practice, he has successfully represented clients in all phases of a federal tax dispute, including IRS audits, appeals, litigation, and collection matters. He also has significant experience representing clients in employment tax audits, voluntary disclosures, FBAR penalties and litigation, trust fund penalties, penalty abatement and waiver requests, and criminal tax matters.

Often times, Mr. Roberts has been engaged to utilize his extensive knowledge of tax controversy matters to assist clients in their transactional matters. For example, he has provided tax advice to businesses on complex tax matters related to domestic and international transactions, formations, acquisitions, dispositions, mergers, spin-offs, liquidations, and partnership divisions.

In addition to federal tax disputes, Mr. Roberts has represented clients in matters relating to white-collar crimes, estate and probate disputes, fiduciary disputes, complex contractual and settlement disputes, business disparagement and defamation claims, and other complex civil litigation matters.

Tax Court Explores Qualified Appraisals

Emanouil v. Comm’r, T.C. Memo. 2020-120 | August 17, 2020 | Gustafson, J. | Dkt. No. 5089-17

Short Summary:  Mr. Emanouil is a real estate developer.  In 1999, he purchased approximately 200 acres of undeveloped property in Westford, Massachusetts.  Although he made several attempts to develop or sell the property over the next several years, he ultimately obtained approval for an affordable housing project on 104 acres of the property.  Towards the conclusion of the project in 2008, he donated 16 acres of the property to Westford.  The following year, after Westford had approved the affordable housing project, Mr. Emanouil donated an additional 71 acres of the property to Westford.

On his 2008 return, Mr. Emanouil reported a $1.5 million charitable contribution deduction with respect to the 16-acre donation.  On his 2009 return, he reported a $2.5 million charitable contribution deduction with respect to the 71-acre donation.  Due to limitations on claiming the charitable contribution deductions for each year, Mr. Emanouil carried forward the deductions to his 2010 through 2012 tax years.

The IRS examined Mr. Emanouil’s 2010, 2011, and 2012 returns and issued a notice of deficiency disallowing the carryover charitable contribution deductions.  The notice of deficiency disallowed the carryovers because, according to the IRS, Mr. Emanouil had failed to substantiate the reported values of the properties transferred and failed to show that the properties were transferred with charitable intent.  The IRS also determined accuracy-related penalties for such years.

Key Issues:  (1) Whether Mr. Emanouil complied with the qualified appraisal requirements of Section 170(f)(11)(C); (2) Whether Mr. Emanouil’s contributions were part of a quid pro quo exchange rather than a charitable gift; (3) What the fair market values were of the properties that Mr. Emanouil contributed; and (4) Whether the accuracy-related penalties apply.

Primary Holdings(1) Although the qualified appraisal did not contain the date (or expected date) of contribution to Westford and although the qualified appraisal did not contain a statement that it was prepared for income tax purposes, Mr. Emanouil substantially complied with the qualified appraisal requirements.  (2) The evidence in this case shows that Mr. Emanouil did not make the charitable contributions as part of a quid pro quo exchange.  (3) The fair market values of the properties that Mr. Emanouil contributed were $1.5 million and $2.5 million, or the amounts as reported on the income tax returns.  (4) The accuracy-related penalties do not apply because there are no underpayments of tax.

Key Points of Law:

InsightThe Emanouil case is a good reminder that strict compliance with certain regulatory provisions is not always required, particularly with respect to the qualified appraisal rules.  Thus, if taxpayers fail to meet one or more requirements for a qualified appraisal, they should carefully consider whether they may raise the doctrine of substantial compliance.

Representation in Tax Audits & Appeals

If you need assistance in managing the audit process, Freeman Law can help taxpayers navigate state tax laws.  We offer value-driven services and provide practical solutions to complex issues. Schedule a consultation or call (214) 984-3410 to discuss our tax representation services.

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