The Tax Court issued its opinion in another Conservation Easement case, Balsam Mountain Investments, LLC v. Commissioner, T.C. Memo 2015-43 (J. Morrison) that involves an easement given in Jackson County, NC relating to a 22 acre tract of property. The Easement deed reserved to the landowner rights to make minor alterations of boundary lines. The Tax Court agreed with the IRS contention that the easement property was not a qualified real property interest because the easement agreement permits the grantor to change what property is subject to an easement, citing Belk. See our blog article dated January 7, 2015.
In Balsam Mountain, the Tax Court found that the easement did not apply to an “identifiable, specific piece of real property” and that the gift did not constitute a gift of a “qualified real property interest.” The taxpayer tried to distinguishBelk because the case did not involve substitution for other lands and only allowed substitution for 5% of the land initially subject to the easement. The Tax Court said that difference does not matter as the easement was not an interest in an “identifiable, specific piece of property.” The case did not speak to “floating easements.”
It is too soon to know if the taxpayers will appeal.