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In yet another case illustrating the strictness of the charitable contribution rules for donations of façade easements, donors were denied, by the US Tax Court, a charitable deduction for the contribution of a qualified easement for failing to attach the qualified appraisal obtained on the easement to their income tax return. They were also subject to the 40 percent substantial valuation misstatement penalties relating to the denied deduction (Gemperle v. Commissioner).

The IRS ruled that a private foundation's ownership of 100 percent of the membership interests of a limited liability company (LLC) operating a low‐income housing project for the elderly was a charitable endeavor of the foundation. The IRS also ruled that the income from the housing project flowing to the foundation from the LLC would not be treated as unrelated business income and that the foundation's ownership of the LLC was not an excess business holding because it was a functionally related business within the meaning of IRC § 4943 (Priv. Ltr. Rul. 201603032).

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