The Martins Lose a Six-Figure Charity Deduction on a Missing Sentence (Clint L. Martin and Jenifer Martin v. Comm., TCM 2026-40)

Sharon Kreider, CPA

Clint Martin and his cousin Stephen co-owned roughly 13 acres in Highland City, Utah, which they donated to the city in 2018. The documentation looked complete. A December 21 joint letter, signed by the donors and the mayor, described the transfer as “a donation of land” for “a conservation contribution.” A warranty deed followed on December 27, conveying the property “for and in consideration of the sum of Ten and no/100 Dollars ($10.00), and other good and valuable consideration.”

The property was appraised at $665,000. On their 2018 return the Martins claimed a $339,400 deduction, $332,500 of it attributable to Clint’s 50% interest, supported by a Form 8283. The IRS disallowed the deduction in full, asserted a $16,516 accuracy-related penalty under §6662(a) and (b)(2), and moved for partial summary judgment on substantiation.

Contemporaneous Written Acknowledgment (CWA) Required

IRC §170(f)(8)(A) requires a contemporaneous written acknowledgment (CWA) from the donee for any contribution of $250 or more. Under §170(f)(8)(B), the CWA must state three things:

A description of the property.
Whether the donee provided goods or services in consideration.
And a good faith estimate of the value of any such goods or services.

The second element is the recurring problem. The Tax Court reads §170(f)(8)(B)(ii) to require an affirmative statement that the donee gave nothing in return, even where nothing was in fact given. Silence does not suffice, and neither do the words “donation” or “gift.”

The requirements are strict, and substantial compliance will not excuse a defective acknowledgment. However, in Irby v. Comm., 139 T.C. 371, 388–89 (2012), the court allowed that a CWA may be assembled from several documents, and the Martins argued the Form 8283, joint letter, and deed together satisfied the statute. For gift deeds specifically, a merger clause serves as an affirmative indication that no outside consideration passed; its absence does not.

Boilerplate Language of Transfer Deed Defeats Contribution

Judge Pugh granted partial summary judgment for the IRS. The property description under §170(f)(8)(B)(i) was satisfied; the consideration requirement was not. None of the three documents affirmatively stated that the city provided nothing in return. The Form 8283 was silent. The joint letter called the transfer a “donation” and a “gift” but did not negate consideration. The deed contained no merger clause, and its only consideration language, the boilerplate recital of “$10.00, and other good and valuable consideration,” affirms consideration rather than negating it. The court rejected the argument that Utah law let the joint letter and deed be read together as the equivalent of a merger clause, finding no authority for looking outside the deed (Durden v. Comm., TCM 2012-140).

With consideration unaddressed, §170(f)(8)(B)(iii) failed as well, and the entire deduction was disallowed, leaving only the §6662(a) penalty for trial. Stephen Martin reached the identical result the same day (Stephen Martin and Amanda Martin v. Comm., TCM 2026-39 (May 14, 2026)).

Tax Practitioner Planning

This was a substantiation failure, not a valuation dispute. The appraisal, the Form 8283, and the recorded deed were all in place, and more than $300,000 in deductions turned on a single omitted sentence.

For any noncash gift, particularly of real property or a conservation easement, do not rely on the deed, the Form 8283, or the client’s own description of the gift. Obtain a separate written acknowledgment from the donee stating that no goods or services were provided in exchange. If a deed will serve as the CWA, confirm it contains a merger clause, and strike or supplement the reflexive “$10.00 and other good and valuable consideration” recital, which recites consideration and works against the taxpayer. The acknowledgment must be in hand by the earlier of the filing date or the due date with extensions. A defect discovered later cannot be cured.

A one-paragraph donee letter obtained before filing resolves the entire issue. Add it to the intake checklist for any gift of $250 or more.