- 51 -
consulted with respect to KQC’s claimed noncash charitable
contribution to TMC were not aware that TMC had constructed a new
building on KQC’s land with HHS’s grant funds.24 Nor were such
representatives aware that KQC was claiming in KQC’s 1999 return
a charitable contribution for the improved property on Maple
Street,25 see supra note 11, in an amount equal to the prelimi-
nary real estate appraisal (i.e., $1,025,000) set forth in Mr.
Mumford’s December 17, 1999 letter for such improved property.
Furthermore, Ernst & Young representatives did not know that on
May 15, 1998, a notice of Federal interest with respect to the
23(...continued)
principal with Ernst & Young in 1999 and 2000, and Mr. Marceron
on behalf of KQC consulted Mr. Johnston, a tax specialist with
Ernst & Young in 2000 who prepared KQC’s 1999 return on the basis
of information provided to him by KQC. Although Mr. Tutor, a tax
manager with Ernst & Young in 2000, signed KQC’s 1999 return as
return preparer, the record does not disclose that KQC represen-
tatives consulted him directly.
24In discussions that Mr. Johnston had with Mr. Marceron
about KQC’s claimed noncash charitable contribution to TMC, Mr.
Marceron did not inform Mr. Johnston that TMC had constructed a
new building on KQC’s land with HHS’s grant funds. Instead, Mr.
Marceron advised Mr. Johnston that KQC had contributed to TMC a
building located on the improved property on Maple Street, which
had a cost basis of $95,000 on KQC’s books and an appraised value
of $1 million. Mr. Marceron explained to Mr. Johnston that the
value of the building that KQC claimed to have given to TMC had
increased to $1 million because TMC had made improvements to that
building.
25Mr. Kaplan and Mr. Marceron informed certain Ernst & Young
representatives that KQC intended to and did give to a tax-exempt
organization a building located on certain land that KQC owned.
They did not advise those representatives that KQC intended to
and did give to a tax-exempt organization certain land that KQC
owned, including all of the buildings and improvements on such
land.
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