Culverhouses Win Tax Dispute in Precedential Conservation Easement Case
Washington, DC — On October 13, the United States Tax Court ruled in favor of Florida philanthropists Hugh and Eliza Culverhouse, saying the value of land the couple donated should remain at $28 million following a dispute with the Internal Revenue Service over a charitable deduction. The ruling follows a 2015 decision by the United States Court of Appeals for the Eleventh Circuit reversing the Tax Court’s initial decision to reduce the value of the donated property by $4 million.
In 2006, the Culverhouse family donated an 82-acre tract of land worth more than $28 million to Sarasota for a public park, community garden, and conservation easement. The IRS challenged the Culverhouse family’s donation and claimed the 82-acre tract of land was essentially worthless. In response, the Culverhouses sued the IRS; and in 2014 the Tax Court ruled in favor of the Culverhouse family, but reduced the value of the donated property to $21 million. The family immediately appealed and has now completely prevailed.
“This is once again a complete win for the Culverhouse family,” said Thor Hearne, who is lead counsel for the Culverhouse family. “This is the third time the Culverhouse family has won and the third time the IRS has lost. The property the Culverhouse family donated to Sarasota is now a popular and greatly-appreciated public amenity. It is unfortunate the IRS chose to waste taxpayer resources challenging the Culverhouse’s donation.” The Eleventh Circuit and Tax Court found the IRS’s arguments to be frivolous and without merit.” Partner Debra Albin-Riley and counsel Meghan S. Largent joined Hearne as members of the litigation team representing the Culverhouse family in this lawsuit. The Eleventh Circuit’s briefing is available here and the Eleventh Circuit’s decision can be found here and the Tax Court’s decision briefing and decision on remand can be found here.
“This case is one of the largest disputes with the IRS involving the donation of a conservation easement,” said Mr. Hearne. “The Eleventh Circuit’s opinion and the Tax Court decision on remand represent a complete victory for the Culverhouse family and this precedent should help others who have donated conservation easements.” Hugh Culverhouse said, “this case is a victory for all taxpayers. It was a delight to work with Thor, Debra and their colleagues at Arent Fox. They demonstrated a commitment to principle and a passion to win.”
Mr. Hearne has a national reputation for his work in complex federal and state litigation and appeals involving constitutional law, eminent domain, civil rights and election matters and other disputes involving the federal government. Mr. Hearne heads Arent Fox's Appellate practice group and recently argued a Supreme Court challenge to Arizona’s election law (where Mr. Hearne was joined by the Arizona attorney general) and represented the Commonwealth of Virginia successfully defending Virginia’s election laws in federal district court and recently in argument before the Fourth Circuit. With more than 30 years of experience, Ms. Albin-Riley is a seasoned trial lawyer who handles complex multiparty litigation, including sophisticated health care matters, complex commercial contract and tort disputes, eminent domain and real estate valuation cases, trust and estate litigation, and class actions.