Green v. United States of America
ORDER granting 37 Motion for Partial Summary Judgment; denied in part and deferred in part 38 Motion for Summary Judgment. Signed by Honorable Timothy D. DeGiusti on 11/4/2015. (mb)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
MART D. GREEN, Trustee of the David
and Barbara Green 1993 Dynasty Trust,
UNITED STATES OF AMERICA,
Case No. CIV-13-1237-D
This is a tax refund action arising from the internal revenue laws of the United States.
Before the Court are the parties’ cross-motions for summary judgment [Doc. Nos. 37,
Plaintiff, and 38, Defendant]. Defendant has responded to Plaintiff’s motion [Doc. No. 42],
and Plaintiff has responded to Defendant’s motion [Doc. No. 43]; Plaintiff has filed a Reply
in support of his motion [Doc. No. 47]. The motions are fully briefed and ready for
determination. This Order primarily addresses Plaintiff’s Motion for Partial Summary
The issues in the motions substantially overlap. However, in addition to the issues
addressed in this Order, Defendant’s Motion requests summary judgment regarding $4.7
million in cash contributions made by Hobby Lobby Stores, Inc., as well as Plaintiff’s overall
entitlement or lack thereof to a tax refund exceeding the $20 million it has already received.
These issues will be addressed in a subsequent order.
Statement of Undisputed Facts
The Trust and GDT
On December 7, 1993, David M. Green, Barbara A. Green, and Mart D. Green signed
a Trust Agreement creating The David and Barbara Green 1993 Dynasty Trust (the “Trust”).
See Complaint [Doc. No. 1-1]. David and Barbara Green are the settlors of the Trust, and
Mart D. Green is the trustee (“Plaintiff”). The Trust expressly authorizes Plaintiff to
“distribute to charity such amounts from the gross income of the Trust as the [Plaintiff]
determines appropriate” [Doc. No. 1-1, § 2.2]. The Trust also provides that “[a] distribution
may be made from the Trust to charity only when both the purpose of the distribution and the
charity are as described in Section 170(c) of the Code” [Doc. No. 1-1, § 1.6].2
The Trust wholly owns GDT CG1, LLC (“GDT”), a single-member limited liability
company. GDT is disregarded as an entity separate from the Trust for federal income tax
“Charitable contribution,” as defined by 26 U.S.C. § 170(c), includes “a contribution
or gift to or for the use of ... [a] corporation, trust, or community chest, fund, or foundation
... organized and operated exclusively for religious [or] charitable ... purposes.” Id. at §
Absent a taxpayer election to the contrary, a single-member limited liability company
is not regarded as separate from its owner for income tax purposes. See 26 C.F.R.
§ 301.7701-3. As such, the income, deductions, and credits of the disregarded entity are
reported and reflected on its owner’s income tax return. Id.
Hob-Lob Limited Partnership
Between 2002 and 2004, Hob-Lob Limited Partnership (“Hob-Lob”) owned or
operated many, but not all, Hobby Lobby stores.4 During this same period, the Trust was a
99% limited partner in Hob-Lob. Consequently, Hob-Lob filed its yearly income tax return
(Form 1065, U.S. Return of Partnership Income) with the Internal Revenue Service (“IRS”)
and, in conjunction with that filing, issued a yearly form known as a Schedule K-1 to all of
its partners, including the Trust.5
On line 22 of the 2002 Schedule K-1 issued to the Trust, Hob-Lob reported that the
Trust received distributions of $38,722,126 during the year ending December 31, 2002. On
line 1 of the same document, Hob-Lob reported that the Trust’s distributive share6 of
ordinary business income totaled $72,465,646 for that same year. The Trust reported such
amount on its 2002 income tax return.
On line 22 of the 2003 Schedule K-1 issued to the Trust, Hob-Lob reported that the
Trust received distributions of $41,076,436 during the year ending December 31, 2003. On
line 1 of the same document, Hob-Lob reported that the Trust’s distributive share of ordinary
Hobby Lobby stores sell craft supplies throughout the United States.
Among other things, a Schedule K-1 identifies each partner’s share of income,
deductions, and credits that flow through the partnership to the partner, as well as any
distributions from the partnership to the partner for the particular year.
“Distributive share” refers to the allocation of income, gain, loss, deduction, and
credit from a partnership business to a partner. See 26 U.S.C. § 702.
business income totaled $68,303,318 for that same year. The Trust reported such amount on
its 2003 income tax return.
On line 19 of the 2004 Schedule K-1 issued to the Trust, Hob-Lob reported that the
Trust received distributions of $29,480,397 during the year ending December 31, 2004. On
line 1 of the same document, Hob-Lob reported that the Trust’s distributive share of ordinary
business income totaled $60,543,215 for that same year. The Trust reported such amount on
its 2004 income tax return.
On February 19, 2003, GDT purchased approximately 109 acres of land and two
industrial buildings in Lynchburg, Virginia from Ericsson, Inc. for $10.3 million. GDT
obtained the money to purchase the property through a distribution from Hob-Lob to the
Trust. For purposes of the summary judgment motions only, the parties stipulate that this
distribution was part of the distributive share of ordinary business income from Hob-Lob to
the Trust in 2003.
On March 19, 2004, GDT donated a significant portion of the property to the National
Christian Foundation Real Property, Inc. (“NCF”). The donation consisted of the two
industrial buildings and approximately 73 acres of land (the “Virginia Property”). At that
time, NCF was an organization described in 26 U.S.C. § 170(b)(1)(A). The Trust reported
on Form 8283, Noncash Charitable Contributions, attached to its 2004 income tax return, that
as of March 19, 2004, its adjusted basis in the Virginia Property was $10,368,113.
Although a factual dispute exists between the parties regarding the fair market value
of the Virginia Property on the date of donation, for purposes of the summary judgment
motions only, both parties stipulate that the Virginia Property had a fair market value in
excess of $10,368,113 on March 19, 2004.
In August 2002, GDT purchased a church building and several outbuildings in
Ardmore, Oklahoma (the “Oklahoma Property”) from Trinity Baptist Church for $150,000.
GDT obtained the $150,000 necessary for the purchase through a distribution from Hob-Lob
to the Trust. For purposes of the summary judgment motions only, the parties stipulate that
this distribution was part of the distributive share of ordinary business income from Hob-Lob
to the Trust in 2002.
On October 5, 2004, GDT donated the Oklahoma Property to the Southwest
Oklahoma District Church of the Nazarene (“SWODCN”). At that time, SWODCN was an
organization described in 26 U.S.C. § 170(b)(1)(A). The Trust reported on Form 8283,
Noncash Charitable Contributions, attached to its 2004 income tax return, that as of October
5, 2004, its adjusted basis in the Oklahoma Property was $160,477. The fair market value of
the Oklahoma Property was $355,000 on said date.
In June 2003, GDT purchased approximately 3.8 acres of land in Dickinson, Texas
(the “Texas Property”) from Marina Bay Development Corp., Inc./Travis Moss for $145,000.
GDT obtained the $145,000 necessary for the purchase through a distribution from Hob-Lob
to the Trust. For purposes of the summary judgment motions only, the parties stipulate that
this distribution was part of the distributive share of ordinary business income from Hob-Lob
to the Trust in 2003.
On October 5, 2004, GDT donated the Texas Property to the Lighthouse Baptist
Church (“LBC”). At that time, LBC was an organization described in 26 U.S.C. §
170(b)(1)(A). The Trust reported on Form 8283, Noncash Charitable Contributions, attached
to its 2004 income tax return, that as of October 5, 2004, its adjusted basis in the Texas
Property was $145,180. The fair market value of the Texas Property was $150,000 on said
On or about October 15, 2005, Plaintiff timely filed the Trust’s Form 1041 income tax
return for tax year 2004 with the IRS, claiming a charitable deduction totaling $20,526,383.
On October 15, 2008, Plaintiff timely filed an amended Form 1041 (the “Amended Return”)
on behalf of the Trust, increasing the Trust’s reported charitable deduction to $29,654,233
and claiming a tax refund of $3,194,748. On December 8, 2011, the IRS sent Plaintiff a
Notice of Disallowance of the refund claim stating “[t]he charitable contribution deduction
for the real property donated in 2004 is limited to the basis of the real property contributed”
[Doc. No. 1-3].
Standard of Decision
Summary judgment is appropriate “if the movant shows that there is no genuine
dispute as to any material fact and that the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). A material fact is one that “might affect the outcome of the suit under
the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute
is genuine if the evidence is such that a reasonable jury could return a verdict for either party.
Id. at 255. If a party who would bear the burden of proof at trial lacks sufficient evidence on
an essential element of a claim, all other factual issues concerning the claim become
immaterial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
The movant bears the burden of demonstrating the absence of a dispute of material
fact warranting summary judgment. Celotex, 477 U.S. at 322-23. If the movant carries this
burden, the nonmovant must then go beyond the pleadings and “set forth specific facts” that
would be admissible in evidence and that show a genuine issue for trial. See Anderson, 477
U.S. at 248; Celotex, 477 U.S. at 324; Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 671
(10th Cir. 1998). “To accomplish this, the facts must be identified by reference to affidavits,
deposition transcripts, or specific exhibits incorporated therein.” Adler, 144 F.3d at 671; see
also Fed. R. Civ. P. 56(c)(1)(A). “The court need consider only the cited materials, but may
consider other materials in the record.” Fed. R. Civ. P. 56(c)(3). The Court’s inquiry is
whether the facts and evidence identified by the parties present “a sufficient disagreement
to require submission to a jury or whether it is so one-sided that one party must prevail as a
matter of law.” Anderson, 477 U.S. at 251-52.
Matters of statutory interpretation present questions of law “appropriate for resolution
on summary judgment.” Thomas v. Metro. Life Ins. Co., 631 F.3d 1153, 1160 (10th Cir.
2011) (citation omitted). When interpreting statutory language, the Court’s duty is to
determine congressional intent by beginning with the “plain language of the law.” St. Charles
Inv. Co. v. Comm’r, 232 F.3d 773, 776 (10th Cir. 2000). Traditional canons of statutory
interpretation guide “judges [in] determin[ing] the Legislature’s intent as embodied in
particular statutory language.” Chickasaw Nation v. United States, 534 U.S. 84, 94 (2001).
However, such guides “need not be conclusive and are often countered ... by some maxim
pointing in a different direction.” Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 115
(2001). Therefore, the Court must analyze the statute as a whole and look to the “disputed
language in context, not in isolation,” when ascertaining congressional intent from statutory
text. True Oil Co. v. Comm’r, 170 F.3d 1294, 1299 (10th Cir. 1999) (internal quotations
Plaintiff’s Motion presents the following issue: “whether a charitable deduction under
26 U.S.C. § 642(c)(1) for donated real property purchased out of gross income should be
calculated based on the property’s fair market value or the [T]rust’s adjusted basis7 in the
property.” See Plaintiff’s Motion [Doc. No. 37] at 1. Plaintiff contends the fair market value
standard should apply to the charitable deduction because Congress did not specify a
different valuation standard in 26 U.S.C. § 642(c)(1). Defendant argues (1) that 26 U.S.C.
§ 642(c)(1) limits a trust’s deduction to the amount of gross income it contributed to charity;
(2) gross income does not include unrealized appreciation; and (3) a liberal construction of
the statute allowing fair market valuation would negate the gross income derivative
Construction of § 642(c)(1)
The Court begins its analysis with the language of 26 U.S.C. § 642(c)(1), which, in
pertinent part, provides:
[T]here shall be allowed as a deduction in computing its taxable
income (in lieu of the deduction allowed by section 170(a), relating to
deduction for charitable, etc., contributions and gifts) any amount of the gross
income, without limitation, which pursuant to the terms of the governing
instrument is, during the taxable year, paid for a purpose specified in section
170(c) (determined without regard to section 170(c)(2)(A)). If a charitable
contribution is paid after the close of such taxable year and on or before the
last day of the year following the close of such taxable year, then the trustee
or administrator may elect to treat such contribution as paid during such
taxable year. The election shall be made at such time and in such manner as the
Secretary prescribes by regulation.
Adjusted basis is “cost, less certain property-related expenditures, depreciation, and
other statutory decreases.” See Defendant’s Motion for Summary Judgment [Doc. No. 38]
at 4, n.1 (citing 26 U.S.C. §§ 1011, 1012(a), and 1016).
Id.8 As indicated in the statute, to properly understand the meaning of § 642(c)(1) requires
one to look to 26 U.S.C. § 170, which pertains to charitable deductions by individuals and
corporations. Among other things, § 170 defines and categorizes qualifying charities and,
based upon the particular charity, limits the amount of a taxpayer’s adjusted gross income
which can be deducted in a single year.9 See 26 U.S.C. § 170(b). It also distinguishes
between charitable contributions of cash and property other than money, and values the latter
at the fair market value at the time of contribution. See 26 U.S.C. § 170(f)(8)(B)(1); see also
26 C.F.R. § 1.170A-1(c)(1).10 The policy behind § 170 is to “encourag[e] charitable
activities.” Michael P. Rose and John C. Chommie, Federal Income Taxation § 11.18, at 664
(3d ed. 1988). The statute at issue, 26 U.S.C. § 642(c)(1), has a similar purpose,11 and must
Neither party contends that the language of § 642(c)(1) is ambiguous, but each
advances different applications on the instant facts. The Court agrees that the language in
question is clear and capable of interpretation without resort to extraneous sources.
Any excess deduction not allowed under the limitation can be carried forward for
five years. See 26 U.S.C. § 170(b)(1)(B)(ii).
“If a charitable contribution is made in property other than money, the amount of
the contribution is the fair market value of the property at the time of the contribution
reduced as provided in section 170(e)(1) and paragraph (a) of § 1.170A – 4, or section
170(e)(3) and paragraph (c) of § 1.170 – 4A.” 26 C.F.R. § 1.170A – 1.
In Old Colony Tr. Co. v. Comm’r, 301 U.S. 379 (1937), the Court stressed the
importance of construing § 162(a) of the 1928 Revenue Act – 26 U.S.C. § 642(c)’s precursor
– congruent with Congress’s intent to “encourage ... donations by trust estates.” Id. at 384.
The Tenth Circuit echoed such sentiment in Comm’r v. F.G. Bonfils Tr., 115 F.2d 788 (10th
Cir. 1940), holding “[t]he purpose of Congress in enacting [this section] was to encourage
charitable gifts ... [and similar] provisions have been judicially construed so as to further and
not hinder their beneficent purpose.” Id. at 791 (citations omitted).
be read in light of the basic definitions and principles set forth in § 170, except where
expressly contradictory. See Erlenbaugh v. United States, 409 U.S. 239, 243 (1972)
(discussing the rule of in pari materia).12
A notable distinction between § 642 and § 170 is the absence of limiting language in
§ 642, which is present in § 170. Rather than place limiting language in § 642, Congress
specified a deduction “without limitation.” See 26 U.S.C. § 642(c)(1); see also Daniel
Halperin, A Charitable Contribution of Appreciated Property and the Realization of Built-in
Gains, 56 TAX L. REV. 1, 24 (2002) (briefly discussing the distinction and acknowledging
the unlimited charitable deduction that trusts and estates enjoy with regard to donations made
from gross income). Defendant’s interpretation, though, seeks to impose limitations where
Congress clearly declined to do so. “[C]ourts must presume that a legislature says in a statute
what it means and means in a statute what it says there.” Conn. Nat’l Bank v. Germain, 503
U.S. 249, 253-54 (1992).
“The rule of in pari materia – like any canon of statutory construction – is a
reflection of practical experience in the interpretation of statutes[; it] ... is but a logical
extension of the principle that individual sections of a single statute should be construed
together, for it necessarily assumes that whenever Congress passes a new statute, it acts
aware of all previous statutes on the same subject.” Erlenbaugh 409 U.S. at 239 (citing Allen
v. Grand Cent. Aircraft Co., 347 U.S. 535, 541 (1954)) (further citations omitted). Thus, 26
U.S.C. §170, and its underlying policy, forms part of the context the Court must consider
when determining the intent of Congress as reflected in the plain language of the statutory
text at issue here. See, e.g., True Oil Co., 170 F.3d at 1299 (disputed language of a statute
must be examined in context, not in isolation; the court looks to the language and design of
a statute as a whole).
Despite the absence of any limiting language in § 642(c)(1), Defendant argues for a
strained construction, and holds tight to the “familiar rule that an income tax deduction is a
matter of legislative grace and that the burden of clearly showing the right to the claimed
deduction is on the taxpayer.” INDOPCO Inc. v. Comm’r, 503 U.S. 79, 84 (1992) (quoting
Interstate Transit Lines v. Comm’r, 319 U.S. 590, 593 (1943) (internal quotations omitted)).
The Sixth Circuit addressed this distinction in Weingarden v. Comm’r, 825 F.2d 1027
(6th Cir. 1987), acknowledging that generally statutes imposing a tax are construed liberally,
in favor of the taxpayer, while statutes allowing deductions and exemptions are strictly
interpreted, being “matters of legislative grace.” Id. at 1029 (citing Porter v. Comm’r, 288
U.S. 436, 442 (1933) and I. R. Mertens, Law of Federal Income Taxation §§ 3.05, 3.07
(1986) (internal quotations omitted)). However, and of particular importance here,
Weingarden went further to distinguish statutes regarding charitable deductions, stating they
are not matters of legislative grace, but rather “expression[s] of public policy.” Weingarden,
825 F.2d at 1029 (citing Helvering v. Bliss, 293 U.S. 144, 150-51 (1934) (further citations
omitted, internal quotations omitted)). As such,“[p]rovisions regarding charitable deductions
should ... be liberally construed in favor of the taxpayer.” Id. (citing Hartwick Coll. v. United
States, 801 F.2d 608, 615 (2d Cir. 1986)). Thus, even if the language of the statute were
unclear, a liberal construction in favor of the taxpayer would be appropriate.
Other language at issue in 26 U.S.C. § 642(c)(1) is the term “gross income,” and
whether that term includes properties purchased by the Trust in one year and donated to
charities in another (“Donated Properties”).13 The Supreme Court, considering 26 U.S.C. §
642(c)(1)’s predecessor, noted “[t]here are no words limiting [donations] to something
actually paid from the year’s [gross] income. And so to interpret the Act could seriously
interfere with [its] beneficent purpose.” Old Colony, 301 U.S. at 348 (emphasis added).
Therefore, the fact that the Donated Properties were given to charities in a year subsequent
to their purchase does not disqualify them from being considered as charitable donations
derived from gross income.
However, Defendant also contends that for the Donated Properties to qualify as
charitable deductions under§ 642(c)(1), they must be “sourced from14 and traceable to15 a
trust’s gross income.” See Defendant’s Motion [Doc. No. 38] at 13 (citing 26 U.S.C. §
642(c)(1) and Crestar Bank v. I.R.S., 47 F. Supp. 2d 670 (E.D. Va. 1999) (emphasis added)).
Gross income includes “all income from whatever source derived, including ... gains
from dealings in property.” 26 U.S.C. § 61(a)(3).
“Sourced” is defined as “a point of origin or procurement.” See Plaintiff’s Response
to Defendant’s Motion for Summary Judgment [Doc. No. 43] at 1 (citing MERRIAM
WEBSTER’S COLLEGIATE DICTIONARY 1123 (10th ed. 1993) (internal quotations omitted)).
“Tracing” is defined as “[t]he process of tracking property’s ownership or
characteristics from the time of its origin to the present.” See Plaintiff’s Response to
Defendant’s Motion for Summary Judgment [Doc. No. 43] at 1 (citing BLACK’S LAW
DICTIONARY 1629 (9th ed. 2009) (internal quotations omitted)).
The parties agree that the requirements necessary to qualify as a deduction under § 642(c)(1)
include that the donation be traceable to gross income. See infra note 16. The Court concurs,
and finds there is no real question here regarding the type of income used to purchase the
Donated Properties. The properties were all purchased with distributions from Hob-Lob to
the Trust. Each distribution was part of GDT’s gross income for the year in which it was
distributed. Therefore, the Donated Properties were purchased with an amount of the Trust’s
Defendant also asserts that Plaintiff is not entitled to the § 642(c)(1) deduction
because, when the donations were made, the Donated Properties had become part of the
principal of the Trust, and that Plaintiff was not authorized to make charitable donations from
principal (i.e., the donations were not “pursuant to the terms of the governing instrument”).
Plaintiff counters that Defendant conflates the federal tax concept of “gross income,” with
state law fiduciary accounting concepts of “income” and “principal.” The Court agrees with
First, it should be noted that Defendant’s argument that the donations are not in
conformity with the Trust instrument is belied by Defendant’s apparent concession that
Plaintiff is entitled to a § 642(c)(1) deduction in some amount – at most, limited by the
adjusted basis in the Donated Properties. See, e.g., Defendant’s Opposition to Plaintiff’s
Motion [Doc. No. 42] at 13 (“It is the United States’ position that, at most, the Trust’s
charitable deduction relating to the Donated ... Properties would be the adjusted basis ....”).
Indeed, Defendant devotes the vast majority of its argument not to the notion that the
Donated Properties were purchased from a source other than gross income, but to the
proposition that the amount of the § 642(c)(1) deduction should be limited to the adjusted
basis in the Donated Properties. Nevertheless, the more appropriate focus when considering
whether the first requirement16 of the § 642(c)(1) deduction is met – that the contribution was
pursuant to the terms of the trust instrument – is whether the trust instrument authorizes the
trustee to make charitable contributions, and here it clearly does. See Trust, § 2.2 [Doc. No.
1-1, p. 7 of 55 (ECF numbering)]; see also John Allan Love Charitable Found. v. United
States, 710 F.2d 1316, 1319 (8th Cir. 1983) (“The statutorily mandated test is whether the
charitable contributions were made ‘pursuant to the terms of the governing instrument.’ We
believe an essential element of this test is that the trust instrument authorize the trustee to
make charitable contributions.”). Defendant’s conflating of fiduciary accounting principles
with the federal tax concept of gross income unnecessarily muddies the water – here, there
can be no serious question that the donations were made “pursuant to the terms of the
The parties agree that to qualify for a § 642(c)(1) deduction a contribution must be:
(1) authorized by and made pursuant to the trust instrument; sourced from and traceable to
gross income; and (3) for a purpose specified in 26 U.S.C. § 170(c). See Plaintiff’s Motion
[Doc. No. 37] at 10; Defendant’s Motion [Doc. No. 38] at 12-13.
This distinction is, for instance, demonstrated in 26 U.S.C. § 643(b), which provides
in pertinent part:
The remaining question is the proper valuation of the Donated Properties – whether
adjusted basis or fair market valuation is appropriate under the statute. Plaintiff contends fair
market value is applicable, while Defendant argues for adjusted basis.
Defendant contends that any capital appreciation must not be considered in the
Donated Properties’ valuation because such constitutes unrealized gains. See Defendant’s
Motion [Doc. No. 38] at 16-19 (citing W.K. Frank Tr. of 1931 v. Comm’r, 145 F.2d 411
(1944), U.S. v. Benedict, 338 U.S. 692 (1950), and Comm’r v. Cent. Hanover Bank & Tr.
Co., 163 F.2d 208 (2d Cir. 1947)). In support of this position, Defendant likens the Donated
Properties either to (1) cash gifts not fully derived from gross income, or (2) donations made
out of a trust’s corpus. However, those analogies are inapposite because, as the Court has
found, each of the Donated Properties derives from the Trust’s gross income.
Under the facts of this case, using adjusted basis as the valuation standard would
allow no consideration for the appreciation of real property donated in kind, regardless of
whether such property was donated in the year of acquisition or in subsequent tax years.
Defendant asks the Court to read a limitation into the statute where none expressly exists.
[T]he term ‘income’, when not preceded by the words ‘taxable’,
‘distributable net’, ‘undistributed net’, or ‘gross’, means the
amount of income of the estate or trust for the taxable year
determined under the terms of the governing instrument and
applicable local law.
See also Estate of Clymer v. Comm’r, 221 F.2d 680, 683 (3d. Cir. 1955); Casco Bank & Tr.
Co. v. United States, 406 F. Supp. 247, 254 (D. Me. 1975).
Conversely, “the fair market value standard is as close to a generalized valuation
standard as there is in the tax code.” Schwab v. Comm’r, 715 F.3d 1169 (9th Cir. 2013).18
Notably, Congress did not specify a different standard of valuation in § 642. Further,
considering the context of the statutory language in question and in light of § 170 ’s general
rule of fair market valuation regarding donations of property other than cash,a fair market
valuation standard is consistent with the observation of the court in Schwab, and does not do
violence to the plain language of § 642(c)(1).
The plain language of 26 U.S.C. § 642 supports a construction in favor of Plaintiff.
The Court finds that Congress sought in § 642(c)(1) to authorize a deduction “without
limitation,” and fair market value is the appropriate valuation standard regarding the Donated
Properties. Therefore, the Oklahoma Property is to be valued at $355,000 as of the date of
donation, and the Texas Property is to be valued at $150,000 as of the date of donation. The
Virginia Property’s fair market value remains to be determined.
IT IS THEREFORE ORDERED that Plaintiff Mart D. Green’s Motion for Partial
Summary Judgment [Doc. No. 37] is GRANTED, and the portions of Defendant United
The Ninth Circuit furthered its explanation by quoting an earlier decision by the Tax
Court – “the concept of fair market value has always been part of the warp and woof of our
income, estate, and gift tax laws, and ... [thus] the necessity of determining ... fair market
values ... for ... numerous purposes has always been a vital and unavoidable function of the
tax administrative and judicial process.” Id. (quoting Nestle Holdings, Inc. v. Comm’r, 94
T.C. 803, 815 (1990) (internal quotations omitted)).
States of America’s Motion for Summary Judgment [Doc. No. 38] addressed in this Order
IT IS SO ORDERED this 4th day of November, 2015.
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