IRS: Facade Conservation Easement Valuation Improper if Hotel Not Open

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The Internal Revenue Service filed Aug. 16 its brief in the appeal by Whitehouse Hotel LP to the U.S. Tax Court's valuation of a historic facade conservation easement granted by Whitehouse in relation to its renovation and redevelopment of a historic New Orleans building and adjacent building into a Ritz Carlton hotel (Whitehouse Hotel LP v. Commissioner, 5th Cir., No. 13-60131, brief filed 8/16/13).
Whitehouse is appealing to the U.S. Court of Appeals for the Fifth Circuit the Tax Court's Oct. 23, 2012, decision rejecting Whitehouse's $7.5 million valuation of its donation, adopting the $1.8 million valuation by the IRS's expert, and imposing a 40 percent penalty under tax code Section 6662(a) (115 DTR K-2, 6/14/13).
Whitehouse granted the easement to preserve the facade of the Maison Blanche building. The restrictions in the easement agreement also included a prohibition on construction of additional hotel rooms above the Kress building.


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