William Stephen Allen and Jane E. Allen, His Wife v. United States

541 F.2d 786 76-2 USTC P 9499 , 6 Envtl. L. Rep. 20 ,783 William Stephen ALLEN and Jane E. Allen, his wife, Appellees, v. UNITED STATES of America, Appellant. No. 74-2506. United States Court of Appeals, Ninth Circuit. June 8, 1976. As Amended Aug. 20 and Sept. 20, 1976. George G. Wolf, Atty. (argued), Dept. of Justice, Washington, D. C., for appellant. Sandra J. Shapiro (argued), of Bancroft, Avery & McAlister, San Francisco, Cal., for appellees. Before GOODWIN and WALLACE, Circuit Judges, and WILLIAMS, * District Judge. ALFRED T. GOODWIN, Circuit Judge: 1 The district court granted a refund after finding the taxpayers entitled to a charitable deduction under Internal Revenue Code of 1954 § 170(c)(1) for the market value of 9.2 acres of redwoods deeded to the City of Mill Valley, California. The government appeals. 2 In 1963, taxpayers bought for investment purposes 22 acres of land zoned for one-acre residential lots. Mill Valley had an ordinance allowing "cluster zoning" that would permit a subdivider to divide a tract into half-acre lots, notwithstanding the one-acre-lot-size rule, provided that equivalent land was preserved as open space. 3 The topography, location…

The district court granted a refund after finding the taxpayers entitled to a charitable deduction under Internal Revenue Code of 1954 § 170(c)(1) for the market value of 9.2 acres of redwoods deeded to the City of Mill Valley, California. The government appeals.

In 1963, taxpayers bought for investment purposes 22 acres of land zoned for one-acre residential lots. Mill Valley had an ordinance allowing “cluster zoning” that would permit a subdivider to divide a tract into half-acre lots, notwithstanding the one-acre-lot-size rule, provided that equivalent land was preserved as open space.

The topography, location of the wooded areas, and aesthetic conditions in the 22 acres commended to the taxpayers a plan of development which would preserve the redwoods intact. Between 1965 and 1967, the taxpayers applied three times to the city for approval of subdivision plans. Each plan created a redwood park, with the balance of the land in streets and half-acre lots. The first two plans were withdrawn by the taxpayers. One of these had not been passed upon by the city. The city approved the second plan, but the taxpayers withdrew it for financial reasons. The third plan showed more…

(dissenting):

I respectfully dissent.

Far from being the subject of Allen’s great beneficence, the transfer of the 9.2 acres was actually a demonstration of his cunning. The benefits Allen derived from conveying the land to the .City are obvious. First, he preserved the stand of trees which he cherished and which made his new development more attractive to prospective plot purchasers. Second, it took the land off the tax rolls. Third, it alleviated opposition to his project which came from local density-conscious citizens who blocked his first map. Finally it moved the city council to approve his new map and allow rezoning. The council’s insistence upon referring to the transfer of the acreage in its rezoning resolution (Exhibit D) shows a clear quid pro quo.

Allen sought to develop his 22 acre parcel with a clustered residential pattern of V2 acre plots. No rezoning would be necessary if he sold his land in one-acre lots, but to make the venture more profitable, he sought city permission to get the larger number of lots from his holdings. His first subdivision map was withdrawn because of local opposition; his second map was approved, but he withdrew it in favor of a third map…