A developer acquired a parcel of unimproved real property that she would like to develop. Although the land is currently zoned for commercial use, the developer would prefer not to begin development until an adjoining city street is widened. With a wider street, her development can include a landscaped public entrance and lighting. Without the widening, the development will have only one entrance that is neither as accessible nor as attractive.
The city plans to widen the street in order to build bike paths, which are now required in its new city plan. It will be easier for the city to widen the street if it acquires an easement across the developer's property. The developer is interested in providing this easement to the city. However, before she acts, the developer would like assurance that she will receive a charitable deduction for the value of the easement. She has asked you to request a letter ruling on this matter.
a. Are there any additional questions you should ask the client before you begin your research?
b. What additional potential sources of information might you want to ask for?
c. Which of the preceding facts are relevant? Which are irrelevant?
d. Is there a chance that you will need to ask more questions at a later point? Why or why not?
e. What is the first question you will try to answer in your research? Are there any additional issues that you can identify at this time?
f. What is the taxpayer's desired result? Why is this important? How does it affect your role as tax advisor?
g. Is this a planning research type of situation? How do you know?
h. Do you have an initial belief regarding the tax treatment in this circumstance?