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Federal Tax Update — June 2017

from By David S. De Jong, Esq., CPA, Stein Sperling Bennett De Jong PC

In Fakiris v. Commissioner, TC Memo 2017-126, the Tax Court denied a charitable deduction on a bargain sale of a theater because the transferee was restricted from selling the theater for five years.

In RP Golf LLC v. Commissioner, 119 AFTR 2d 2017-________, the Eighth Circuit Court of Appeals agreed with the Tax Court that a charitable deduction for a conservation easement cannot be claimed if the land is subject to unsubordinated bank mortgages. In Ten Twenty Six Investors v. Commissioner, TC Memo 2017-115, the Tax Court disallowed a conservation easement where the donor failed to record the grant for two years; the court determined that the delay violated the requirement of perpetuity of the restriction.

In Watts v. Commissioner, TC Memo 2017-114, the Tax Court determined that the abandonment of a partnership interest gave rise to a capital loss rather than an ordinary loss; the Fifth Circuit Court of Appeals in a surprise 2015 decision had ruled that the abandonment of stock gave rise to an ordinary loss.

In Action on Decision 2017-5, IRS indicated its disagreement with Tsehay v. Commissioner in which the Tax Court allowed the father of five children to claim the earned income credit on a married filing separate return in violation of the statute. more

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