Glass v. Commissioner of Internal Revenue

In 1988, Charles and Susan Glass (plaintiffs) purchased a 10-acre parcel of land on the shoreline of Lake Michigan. There were three buildings on the property: a cabin, a guest cottage, and a garage. The parcel was a habitat for two species of plants that were considered threatened as well as other flora and fauna in a relatively natural state, or with little human interference. In the early 1990s, the Little Traverse Conservancy (the conservancy), a nonprofit corporation with the purpose of protecting the natural integrity of northern Michigan, sought contributions of conservation easements along the Lake Michigan shoreline. In 1992 and 1993, the Glasses granted conservation easements to the conservancy. The terms of the easements were drafted to ensure that the Glass property would not be used in a way inconsistent with the purpose of conservation and that the plant and wildlife habitats on the property would remain protected. Accordingly, the Glasses claimed charitable deductions on their 1992 and 1993 tax returns. The commissioner of the Internal Revenue Service (defendant) issued a notice of deficiency to the Glasses because the conservation contributions did not meet one of the requirements for claiming a qualified conservation contribution. The Glasses filed a petition in tax court. The commissioner agreed that the conservation easements met two of the three requirements for a qualified conservation contribution, which were that the property, i.e., the easements, were qualified real property interests and that the recipient of the contribution, i.e., the conservancy, was a qualified organization. However, the commissioner disputed the third requirement, that the conservation easements were exclusively for conservation purposes. The tax court determined that the conservation easements were exclusively for conservation purposes and found for the Glasses. The commissioner appealed.