Carsten Hoffmann (FMV Opinions) sent a comment in response to last week’s BVWire™ˆ (96-4) piece on case law involving chartable contributions with put rights.

Hoffmann responded:

“I always enjoy your write ups and closely read just about all of them. But I have to tell you that I think your brief summary on the recent BVWire issue:

“a subscriber recently asked if we’d seen any case law on charitable contributions with put rights” – is very poorly answered by the first expert.

The Hackl case is not a charitable contribution case and to make the boilerplate statement that donations of private company stock are gifts of future interests is a gross and misleading simplification. Hackl was a gift tax case that had some very unique facts with regard to a partnership running a tree farm with a very restrictive operating agreement. The court applied the property test and the income test to determine if there was a substantial present economic benefit. The court decided that Hackl did not pass this test.

However, this case is not on point and does not answer your reader’s question with regard to charitable cases and put rights.  I think the proper answer might be something along the lines of: there are no cases dealing specifically with put rights and charitable contributions…however, from the gift tax world, here is what we know about put rights and how they may impact discounts.”