Judge Dennis Jacobs
Scheidelman donated a facade conservation easement for her Brooklyn brownstone to the National Architectural Trust. The Tax Court disallowed her deduction for the easement’s value, ruling that the appraisal obtained from qualified real estate appraiser Drazner insufficiently explained the method and basis of valuation, and thus was not a “qualified appraisal” under Treasury Regulation §1.170A-13(c)(3). Tax Court also disallowed Scheidelman’s deduction for a cash contribution to the trust, deeming it a quid pro quo for the easement’s acceptance. The Second Circuit vacated the Tax Court’s decision and remanded the case. The “before-and-after” method used by Drazner is an accepted means of valuing conservation easements. Further noting that Drazner’s approach was nearly identical to that approved in Simmons v. Commissioner, the circuit—distinguishing Friedman v. Commissioner and Jacobson v. Commissioner—found Drazner’s appraisal provided the IRS with enough information to evaluate the claimed deduction. In holding Scheidelman’s cash contribution deductible under Internal Revenue Code §170, the circuit, finding support in Kaufman v. Commissioner, deemed the cash payment part of her donation to the trust.