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We hold that petitioners’ respective contributions in 1992
and 1993 of the conservation easements are qualified conservation
contributions under section 170(h)(1) because, in relevant part,
they protect a relatively natural habitat of wildlife and plants
and are exclusively for conservation purposes.19 In so holding,
we have considered all arguments made as to the issues decided
herein, and we have rejected as meritless those arguments not
discussed herein.20
19 The encumbered shoreline is a portion of real property
used by petitioners as their personal residence, and sec.
170(h)(4)(A)(ii) does not require that the protection of the
natural habitats referenced therein be pursuant to a clearly
delineated governmental conservation policy. The staff of the
Joint Committee on Taxation has recently prepared a report
stating that sec. 170(h) is “so broad that the IRS effectively
has no basis to challenge contributions claimed to have been made
for such [conservation] purposes” and “the status quo in essence
permits the donor and the donee, the two parties with the
greatest incentive to reach such a conclusion, to determine that
a conservation purpose is served.” Staff of the Joint Committee
on Taxation, Options to Improve Tax Compliance and Reform Tax
Expenditure 286 (Jan. 27, 2005). The report proposes changes to
sec. 170(h). Id. at 1, 277. The proposal, if adopted, would
provide that the protection of the natural habitats referenced in
sec. 170(h)(4)(A)(ii) is exclusively for conservation purposes
only if it is pursuant to a clearly delineated governmental
policy; i.e., it furthers a specific, identified conservation
project. Id. at 282. The proposal, if adopted, would provide
that a qualified real property interest is not considered as
contributed exclusively for a conservation purpose if the donor
(or a family member of the donor) has a right to use all or a
portion of the real property as a personal residence at any time
after the contribution. Id. at 283.
20 At trial, the Court severed from the matter at hand the
issue concerning the fair market value of petitioners’
contributions. Respondent asserts as to the matter at hand that
petitioners contributed a small portion of the property and
(continued...)
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