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The parties agree that the easement granted by the Johnstons
in December 1989 was a qualified conservation contribution under
section 170(f)(3)(B)(iii) and (h), and that the grant of the
conservation easement qualifies as a deductible charitable
contribution under section 170(a)(1) and (c). Unresolved,
however, is the value of the charitable contribution amount.
Subsumed in this issue is the question of whether the highest and
best use of the property before the date of gift was
predominantly rural development as argued by petitioners, or
whether it was primarily recreational as argued by respondent.
An easement is an interest in real property that conveys
use, but not ownership, of a portion of an owner's property.
Dorsey v. Commissioner, T.C. Memo. 1990-242. The value of an
easement is estimated as some part of the amount of value it adds
to the property it benefits, or the loss in value to the property
it burdens. Id.
The amount allowable as a deduction with respect to a
charitable contribution of property is usually determined by the
fair market value of the property donated; i.e., the price at
which the property would change hands between a willing buyer and
willing seller, on the date of the gift. Sec. 1.170A-1(c)(2),
Income Tax Regs. A conservation easement, however, is normally
granted by deed of gift; consequently, there is rarely an
established market from which to derive fair market value. See
Symington v. Commissioner, 87 T.C. 892, 895 (1986). Therefore,
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