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the State, all the disputed land, including the 1988 gift land.
The agreement included a side agreement whereby Secretary Clark,
who was authorized to sign Internal Revenue Forms 8283 (Noncash
Charitable Contributions) on behalf of the Delaware Department of
Natural Resources, executed the donee acknowledgment portion of
Form 8283 with regard to the 1988 gift land.
Pursuant to the terms of the agreement, deeds and documents
were recorded to finalize the property transfer, including a May
29, 1992, quitclaim deed to the 1988 gift land (the 1992 quitclaim
deed).3 The State also had an option under the agreement to
purchase additional land from petitioners at a bargain sales price.
A July 25, 1992, Stipulation of Dismissal concluded the State court
action.
Petitioners' Federal Income Tax Returns
Petitioners did not claim a charitable contribution deduction
with regard to the 1988 gift land on their original 1988 Federal
income tax return.4 On April 15, 1992, petitioners amended their
1988 return to claim a refund based on their entitlement to a
$5,810,000 charitable contribution deduction, arising from their
3 The parties utilized a quitclaim deed because Delaware
law treats a quitclaim deed as conveying any title that the donor
has. It is not, however, an acknowledgment of title. Thus, by
accepting petitioners' 1982 quitclaim deed, the State of Delaware
did not recognize that petitioners ever held title to the 1988
gift land.
4 Petitioners reported capital gains in excess of $8
million on their 1988 return.
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