Taxation - Federal Income Tax - Severance Damages to Real Property are a Component of Charitable Deduction

The United States selected part of petitioners' estate for construction of a Nike missile base and began condemnation proceedings and negotiations for sale of the premises in lieu of condemnation. Upon failure of the parties to agree on a sale price, petitioners made a gift of the site and certain easements in adjoining land to the United States for so long as the site was used as a missile base. In their 1955 return petitioners claimed a charitable deduction of $69,782 as the fair market value, including severance damages to the remaining portion of their estate, of the property conveyed. The Government allowed a deduction of only $1,200 for the land conveyed.

In a deficiency proceeding before the Tax Court, held, petitioners are entitled to a deduction of $69,961. Severance damages are an intrinsic part of the fair market value of property contributed. Benjamin Klopp, 29 P-H Tax Ct. Mem.

1084 (1960).