Latest Case This Week: Hoffman Properties II, L.P. v. Commissioner of Internal Revenue (6th Cir.)

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SAMUEL ESTREICHER, JONATHAN F. HARRIS

NYU law professors Samuel Estreicher and Jonathan F. Harris describe how the COVID-19 pandemic is forcing the United States to confront the problem of unchecked globalization. Estreicher and Harris argue that once the pandemic subsides, U.S. policymakers should, as a matter of national security, mandate that a minimum percentage of essential supplies be manufactured domestically.

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Unconstitutional Chaos: Abortion in the Time of COVID-19

JOANNA L. GROSSMAN, MARY ZIEGLER

SMU Dedman School of Law professor Joanna L. Grossman and Florida State University law professor Mary Ziegler discuss the abortion bans implemented in several states in response to the COVID-19 pandemic. Grossman and Ziegler explain why the bans are constitutional and comment on the connection between the legal challenges to those bans and the broader fight over abortion rights.

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Hoffman Properties II, L.P. v. Commissioner of Internal Revenue

Court: US Court of Appeals for the Sixth Circuit

Docket: 19-1831

Opinion Date: April 14, 2020

Judge: Thapar

Areas of Law: Real Estate & Property Law, Tax Law

Hoffman owns the historic Tremaine Building in Cleveland, Ohio. Over a decade ago, Hoffman donated an easement in the façade of the building and certain airspace restrictions associated with the building to the American Association of Historic Preservation (AAHP). Hoffman agreed not to alter the historic character of the façade or to build in the airspace above or next to the building—subject to certain conditions. Hoffman then sought a $15 million tax deduction for its donation of a “qualified conservation contribution,” I.R.C. 170(f)(3)(B)(iii). The IRS and Tax Court concluded that Hoffman was not entitled to a deduction because the donation was not “exclusively for conservation purposes.” The Sixth Circuit affirmed. To be deductible, the donation must protect the conservation purposes “in perpetuity,” I.R.C. 170(h)(5)(A) and include “legally enforceable restrictions” that will prevent the donor from using its retained interest in the property in a way “inconsistent with the [donation’s] conservation purposes.” The donation agreement gives Hoffman the right to propose changes to the facade or airspace, after which AAHP has a 45-day window in which to prevent those changes. If the organization misses that window—for whatever reason—it loses the ability to stop the change. The provision violates the “perpetuity” requirement.