Tax Court Holds IRC Charitable Contribution Subsection is not Self-Executing in the Absence of Regs

On December 22, 2016, the United States Tax Court (the “Court”) issued 15 West 17th Street LLC v. Commissioner, 147 T.C. No. 19 (2016) and addressed, a question related to the statutory construction of section 170(f)(8),[1] which governs the substantiation requirements for certain charitable contributions. The Court held that the taxpayer was not entitled to a charitable contribution deduction for its donation of a historic preservation deed of easement to a non-profit organization on the ground that the rulemaking authority delegated in subparagraph (D) is not self-executing in the absence of regulations. Therefore, the general rule set forth in subparagraph (A) requiring a contemporaneous written acknowledgment applied to the gift at issue.  

In 2007, the petitioner, a New York limited liability company (the “LLC”) executed a historic preservation easement deed granting a perpetual conservation easement to the Trust for Architectural Easements (the “Trust”), a tax exempt organization under section 501(c)(3). Six months later, the Trust sent the LLC a letter acknowledging receipt of the easement, but the letter did not contain the information required by section 170(f)(8)(B) for substantiation of a charitable contribution. [2] The LLC claimed a charitable contribution deduction in the amount of $64,490,000 on its 2007 Form 1065, U.S. Return of Partnership Income, which amount represented the value of the easement the LLC contributed to the Trust.

In 2011, the Internal Revenue Service (“IRS”) issued the LLC a notice of final partnership administrative adjustment (“FPAA) disallowing the charitable contribution deduction on the ground that the LLC has not satisfied the requirements of section 170 and the corresponding Treasury Regulations. The LLC timely petitioned the Court for review of the FPAA. In 2014, while the case was still pending before the Court, the Trust submitted an amended Form 990 for tax year 2007, which included the information required by section 170(f)(8)(B) with respect to the LLC’s donation. The LLC subsequently filed a motion for partial summary judgment requesting the Court to hold that the LLC satisfied the substantiation requirements of section 170(f)(8).

Section 170(f)(8)(A) sets forth the general rule that “[n]o deduction shall be allowed . . . for any contribution of $250 or more unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgement of the contribution by the donee organization.” However, section 170(f)(8)(D) provides an exception and states that a contemporaneous written acknowledgement is not needed to substantiate a charitable contribution “if the donee organization files a return, on such form and in accordance with such regulations as the Secretary may prescribe, which includes the information” required by section 170(f)(8)(B).

The Court rejected the LLC’s contention that subparagraph D should be governed by Treasury Regulation section 1.6033-2. The Court reasoned that if Congress had intended subparagraph D to refer to existing regulations, it is unlikely they would have said “in accordance with such regulations as the Secretary may prescribe.” The Court determined that Congress was referring to regulations that the Secretary may promulgate in the future that would specify the specific procedure to be followed by a donee organization submitting a return under section 170(f)(8)(D).

The Court next analyzed whether the statute was self-executing in the absence of regulations and whether Congress couched its delegation of rulemaking authority in mandatory or permissive terms. The Court held that the legislative history made clear that Congress did not intend subparagraph D to be self-executing in the absence of regulations. Rather, there are important policy questions raised by the section 170(f)(8)(D) alternative to the 170(f)(8)(A) regime that must be answered before implementing section 170(f)(8)(D). Accordingly, the Court held that in the absence of regulations under section 170(f)(8)(D), the requirements of section 170(f)(8)(A) must be followed when substantiating a charitable contribution.

By holding that subparagraph D was not self-executing in the absence of regulations, the Court avoided answering a question raised by the ambiguity of section 170(f)(8)(D): what is a return for purposes of the statute? It is worth noting that Judge Gustafson held in his dissent that Treasury Regulation section 1.6033-2 should be applied to this case, which seems to indicate that “return” for purposes of section 170(f)(8)(D) encompasses not only a typical tax return, but also an information return (such as a 990 filed by an exempt organization) and an amended return. Whether this question will be addressed when final regulations are issued is yet to be seen.

*The author would like to thank Andrew Yingling, Georgetown University Law Center LL.M. in Taxation candidate 2017, for his contributions to this article.


[1] All section references are to the Internal Revenue Code of 1986, as amended.

[2] A contemporaneous written acknowledgment meets the requirements of section 170(f)(8)(B) if it includes:


  • The amount of cash and a description (but not value) of any property other than cash contributed.
  • Whether the donee organization provided any goods or services in consideration, in whole or in part, for any property described in clause (i).
  • A description and good faith estimate of the value of any goods or services referred to in clause (ii) or, if such goods or services consist solely of intangible religious benefits, a statement to that effect.


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