FILED: NEW YORK COUNTY CLERK 07/29/ :04 PM INDEX NO / Legal

Transcription

1 FILED: NEW YORK COUNTY CLERK 07/29/ :04 PM INDEX NO / Legal 10:40:62 a.m /22 NYSCEF DOC. NO. 51 RECEIVED NYSCEF: 07/29/ Legal 10:40:62 a.m /22 May 17,2005 May 17, 2005 Mecox Partners, LP Mecox Partners, LP BLDG Management Co. Inc. 52 Vanderbilt Avenue New York, New York BLDG Management Co. Inc. 52 Vanderbilt Avenue New York, New York Re: Facade Easement Re: Dear Ladies and Gentlemen: Dear Ladies and Gentlemen: Facade Easement We have acted as counsel to Mecox Partners, LP (the "Donor") with respect to your We have acted as counsel to Mecox Partners, LP (the "Donor") with respect to your granting of a facade easement (the "Easement") on the real property located at I Jane Street, granting of a facade easement (the "Easement") on the real property located at I Jane Street, New York, NY (the "Property") to the National Architectural Trust (the "NAT"). The New York, NY (the "Property") to the National Architectural Trust (the "NAT"). The granting of the easement was accomplished pursuant to a Conservation Deed of Easement (the granting of the easement was accomplished pursuant to a Conservation Deed of Easement (the "Agreement") dated December li, 2004 in favor of the NAT which encumbers the facade of the "Agreement") dated December 13, 2004 in favor of the NAT which encumbers the facade of the Property. It is our understanding that the Easement was delivered to the NAT in 2004 and Property. It is our understanding that the Easement was delivered to the NAT in 2004 and recorded in Except as otherwise provided, capitalized terms not defined herein have the recorded in Except as otherwise provided, capitalized terms not defined herein have the meanings set forth in the Agreement. meanings set forth in the Agreement. You have requested our opinion concerning whether your grant of the Easement in favor You have requested our opinion concerning whether your grant of the Easement in favor of NAT constituted a qualified conservation contribution under section 170(h) of the Internal of NAT constituted a qualified conservation contribution under section 170(h) of the Internal Revenue Code of 1986 (the "Code") thereby allowing a deduction for federal income tax Revenue Code of 1986 (the "Code") thereby allowing a deduction for federal income tax purposes under the provisions of; and subject to the limitations of; Code section 170 and the purposes under the provisions Of, and subject to the limitations of, Code section 170 and the other provisions of the Code. other provisions of the Code. FM v,1 #1/097/ /11/ PM FM v,1 #11097/ /11/ ;40 PM

2 Legal 10:41:05 a.m / Legal 10:41:05 a.m HERRICK, FEINSTEIN ELP HERRICK, FEINSTEIN LL? Page 2 Page 2 Based on the facts and assumptions hereinafter set forth, and on a. reasoned analysis of Based on the facts and assumptions hereinafter set forth, and on a. reasoned analysis of Section 170 of the Code, the Regulations (defined below) and other relevant authorities, it is our Section 170 of the Code, the Regulations (defined below) and other relevant authorities, it is our opinion that your grant of the Easement to the NAT pursuant to the terms of the Relevant opinion that your grant of the Easement to the NAT pursuant to the terms of the Relevant Documents (defined below) should constitute a qualified conservation contribution which could Documents (defined below) should constitute a qualified conservation contribution which could qualify you for a charitable deduction. qualify you for a charitable deduction. Our opinion is based upon the facts and assumptions set forth below and on the Our opinion is based upon the facts and assumptions set forth below and on the provisions of the Code, the treasury regulations promulgated thereunder ("Regulations"), as well provisions of the Code, the treasury regulations promulgated thereunder ("Regulations"), as well as interpretations of the foregoing as expressed in court decisions, administrative determinations as interpretations of the foregoing as expressed in court decisions, administrative determinations and the legislative history as of the date of this opinion. These provisions and interpretations are and the legislative history as of the date of this opinion. These provisions arid interpretations are subject to change, which may. or may not be retroactive in effect, that might result in subject to change, which may. or may not be retroactive in effect, that might result in modifications of cur opinion. Any variation of actual facts from the facts and assumptions set modifications of our opinion. Any variation of actual facts from the facts and assumptions set forth herein may also affect the continuing validity of our opinion. There car be no guarantee forth herein may also affect the continuing validity of our opinion. There can be no guarantee that following an audit, the Internal Revenue Service (the "IRS") will not take a position contrary that following an audit, the Internal Revenue Service (the "IRS") will not take a position contrary to the opinion set forth herein, which ultimately may be sustained by the courts, since an opinion to the opinion set forth herein, which ultimately may be sustained by the courts, since an opinion of counsel is binding on neither the IRS or the courts. of counsel is binding on neither the IRS or the courts, In that regard, for purposes of rendering this opinion, we have examined originals, In that regard, for purposes of rendering this opinion, we have examined originals, certified copies or copies otherwise identified to our satisfaction as being true copies of the certified copies or copies otherwise identified to our satisfaction as being true copies of the originals of the Agreement, an Internal Revenue Service determination letter issued to the NAT, originals of the Agreement, an Internal Revenue Service determination letter issued to the NAT, and copies of the INIAT's most recently filed IRS Form 990 (collectively, the "Relevant and copies of the NAT's most recently filed IRS Form 990 (collectively, the "Relevant Documents"). We have relied on representation made by the NAT that it is a public charity as Documents"). We have relied on representation made by the NAT that it is a public charity as HP v.1 # i 1097/exn 03/11/ :40 PM HP v.1 #11097/ /11/ :40 PM

3 Legal 10:41:21 a.m / Legal 10:41:21 a.m /22 DERRICK, FeINSTE1N LLP tierrick, FEINSTEIN LLP Page 3 Page 3 described in the Code. We have assumed that all original documents (including signatures) arc described in the Code. We have assumed that all original documents (including signatures) are authentic and duly executed by persons possessing legal capacity and authority to execute and authentic and duly executed by persons possessing legal capacity and authority to execute and deliver such documents. We have also assumed the conformity to original documents of all deliver such documents. We have also assumed the conformity to original documents of all documents submitted to us as certified or photostatic copies, and the authenticity of the originals documents submitted to us as certified or photostatic copies, and the authenticity of the originals of such latter documents. We have not made an independent investigation of any of the facts of such latter documents. We have not made an independent investigation of any of the facts relating to this opinion whether such facts are set forth in the materials that we have examined or relating to this opinion whether such facts are set forth in the materials that we have examined or not. We have consequently assumed in rendering this opinion that the information presented in not. We have consequently assumed in rendering this opinion that the information presented in such materials and otherwise finnished to us accurately and completely describes, in all material such materials and otherwise tinnished to us accurately and completely describes, in all material respects, all facts relevant to your situation. We have further assumed that there has been no respects, all facts relevant to your situation. We have further assumed that there has been no amendment made to the documents referred to herein prior to the date hereof, that all parties will amendment made to the documents referred to herein prior to the date hereof, that all parties will perform in accordance with the terms of such documents, and that there are no agreements or petforrn in accordance with the terms of such documents, and that there are no agreements or understanding other than those contained in such documents that would affect our opinions understanding other than those contained in such documents that would affect our opinions expressed below. expressed below. In rendering this opinion, we are relying upon the Relevant Documents and, in addition to In rendering this opinion, we are relying upon the Relevant Documents and, in addition to the assumptions described above, we have relied on the following assumptions; the assumptions dcscribed above, we have relied on the following assumptions: 11F v /0300i 03/ :40 PM 1IF v /Q001 03/11/ :40 PM

4 Legal 10:41:34 a.m / Legal 10:41:34 a.m Page 4 Page 4 1. an appraisal of the Easement will be made prior to the filing by the Donor 1. an appraisal of the Easement will be made prior to the filing by the Donor of its tax return for the 2004 tax year (the "Appraisal"), which Appraisal of its tax return for the 2004 tax year (the "Appraisal"), which Appraisal will constitute a qualified appraisal for purposes of Section 170 of the Will constitute a qualified appraisal for purposes of Section 170 of the Code'; Code'; 2, the Donor holds the Property as a capital asset and for investment 2, the Donor holds the Property as a capital asset and for investment purposes (and not as inventory); purposes (and not as inventory); 3. neither the Donor, nor anyone related to the Donor, will receive any 3. neither the Donor, nor anyone related to the Donor, will receive any benefit, incidental or otherwise, in return for, or because of, the grant of benefit, incidental or otherwise, in return for, or because of, the grant of the Easement in favor of the NAT other than a tax deduction in respect of the Easement in favor of the NAT other than a tax deduction in respect of their portion of the Easement their portion of the Easement; In July 2004, the IRS issued Notice stating that it would, in certain circumstances, disallow deductions and possibly impose penalties and excise taxes upon taxpayers that donate conservation easements to charities. Conservation easements include (1) easements for the preservation of land areas for outdoor recreation or education, (2) easements for the protection of natural habitats, (3) easements for the preservation of open spaces and (4) facade easements for the preservation of certified historic structures. In this notice the IRS re-confirmed its position that deductions for charitable donations of conservation easements will be disallowed if the donation of an easement has no material effect on the value of real property or if taxpayers fail to meet all the requirements of Treas. Reg A-14, including the substantiation, in good faith, of the value of the casement. In addition, on December 17, 2004 the U.S. Senate Committee on Finance issued a press release stating that they plan to put forth legislation early in 2005 that would increase and create additional fines and penalties on promoters, taxpayers and appraisers who participate, aid or assist in the donation of facade easements found to be significantly overvalued. The press release also stated that the Committee Was calling on the IRS commissioner to mate review of facade easements a priority for audit. 'In July 2004, the IRS issued Notice stating that it would, in certain circumstances, disallow deductions and possibly impose penalties and excise taxes upon taxpayers that donate conservation easements to charities. Conservation easements include (1) easements for the preservation of land areas for outdoor recreation or education, (2) easements for the protection of natural habitats, (3) easements for the preservation of cpen spaces and (4) facade easements for the preservation of certified historic structures. In this notice the IRS re-confirmed its position that deductions for charitable donations of conservation easements will be disallowed if the donation of an easement has no material effect on the value of real property or if taxpayers fail to meet all the requirements of Treas. Reg A44, including the substantiation, in good faith, of the value of the easement. In addition, on December 17, 2004 the U.S. Senate Committee on Finance issued a press release stating that they plan to put forth legislation early in 2005 that would increase and create additional fines and penalties on promoters, taxpayers and appraisers who participate, aid or assist in the donation of facade easements found to be significantly overvalued. The press release also stated that the Committee Was calling on the IRS commissioner to mate review of facade easements a priority for audit. HP v.1 *11007A:001 OM 1/ :40 PM HP v.1 id loonuol 03/11/ :40 PM

5 Legal 10:41:51 a.m / Legal 10:41:51 a.m /22 HERRICK, FEINSTEIN LL.P Page 5 Page $ 4. any and all necessary record keeping requirements will be complied with, 4. any and all necessary record keeping requirements will be complied with, including the timely and proper completion, execution and filing of IRS including the timely and proper completion, execution and filing of IRS Form 8283 (executed by the NAT and the qualified appraiser) with the Form 8283 (executed by the NAT and the qualified appraiser) with the IRS; IRS; 5. the Agreement was delivered to the NAT in 2004 (and recorded in the 5. the Agreement was delivered to the NAT in 2004 (and recorded in the appropriate office for recording of deeds) and there are no other, appropriate office for recording of deeds) and there are no other, agreements with the NAT; agreements with the NAT; 6. prior to the Donor filing its tax return for the 2004 tax year with the IRS, 6. prior to the Donor filing its tax return for the 2004 tax year with the IRS, the property will be either (a) listed on the National Register or (b) located the property will be either (a) listed on the National Register or (b) located in a historic district and certified by the Seeretary of the Registry as being in a historic district and certified by the Secretary of the Registry as being of historic significance to the district; and of historic signi6ance to the district ; and 7. at the time of the grant of the Easement and at the time of recording of the 7. at the time of the grant of the Easement and at the time of recording of the Agreement, there are no liens on the Property or other agreements that Agreement, there are no liens on the Property or other agreements that could impair the NAT'S ability to enforce the terms of the Agreement or could impair the NAT's ability to enforce the terms of the Agreement or be in contravention of any of the terms of the Agreement. be in contravention of any of the terms of the Agreement. HF v.1 # (097/ /11/ PM HT v.1 tilf1)97/ /1 I/ PM

6 Legal 10:42:01 a.m Legal 10:42:01 a.m /22 Page 6 Page 6 Discussion Discussion 1. Contributions urty, 1. Contributions of Property. Section 170(a) of the Code provides, subject to certain limitations, a deduction for Section 170(a) of the Code provides, subject to certain limitations, a deduction for contributions and gifts to or for the use of organizations described in Section 170(c), payment of contributions and gifts to or for the use of organizations described in Section 170(c), payment of which is made within the taxable year2, which is made within the taxable year Donation of Less Than Entire interest. 2. Donation of Less Than Entire interest. Section 1,170A-1(c)(1) of the Regulations provides that, in general, if a charitable Section 1.170A-1(c)(1) of the Regulations provides that, in general, if a charitable contribution is trade in property other than money, the amount of the contribution is the fair contribution is made in property other than money, the amount of the contribution is the fair market value of the property at the time of the contribution. market value of the property at the time of the contribution. Code Section 170(i)(3XA), however, states that a taxpayer is not allowed a deduction if Code Section 170(i)(3XA), however, states that a taxpayer is not allowed a deduction if that taxpayer contributes less than its entire interest in property to a charitable organization. that taxpayer contributes less than its entire interest in property to a charitable organization. Code Section 170(0(3)(B), however, provides that the rule which disallows a charitable Code Section 170(0(3)(B), however, provides that the rule which disallows a charitable deduction for the charitable donation of less than a taxpayer's entire interest in property does not deduction for the charitable donation of less than.a taxpayer's entire interest in property does not apply to the charitable donation of a qualified conservation contribution. apply to the charitable donation of a qualified conservation contribution. 2 You should be aware that the charitable contribution of property held for less than one year may result in income recognition to the donor. 2 You should ix aware that the charitable contribution of property held for less than one year may result in income recognition to the donor. 13F v.1 # /11/ :40 PM 1IF v.1 #11097t000! 03/11/ :46 PM

7 Legal 10:42:13 a.m Legal 10:42:13 a.m Page 7 Page 7 3. Qualified Conservation Contribution 3. Qualified Conservation Contribution Section 170(h)(1) of the Code defines the term "qualified conservation contribution," as a Section 170(h)(1) of the Code defines the term "qualified conservation contribution," as a contribution of (a) a "qualified real property interest", (b) to a "qualified organization", (c) contribution of (a) a "qualified real property interest", (b) to a "qualified organization", (c) "exclusively for conservation purposes." "exclusively for conservation purposes." (a) Qualified Real Property Interest (a) Qualified Real Property Interest Section 170(h)(2XC) of the Code defines the term "qualified real property interest" to Section 170(h)(2XC) of the Code defines the term "qualified real property interest" to include a restriction granted in perpetuity on the use of real property. The Regulations state that a include a restriction granted in perpetuity on the use of real property. The Regulations state that a perpetual easement on real property is one such type of perpetual conservation restriction and perpetual easement on real property is one such type of perpetual conservation restriction and therefore one such type of qualified real property interest. therefore one such type of qualified real property interest. (b) Qualified Organization (b) Qualified Organization A "qualified, organization," according to Section 170(h)(3)(3) of the Code, includes an A "qualified, organization," according to Section 170(hX3)(B) of the Code, includes an organization which is described in Section 501(c)(3) and meets the requirements of Section organization which is described in Section 501(c)(3) and meets the requirements of Section 509(a)(2) of the Code. In essence, such an organization is one that is exempt from federal 509(a)(2) of the Code. In essence, such an organization is one that is exempt from federal income taxation arid receives a majority of its support from the general public or the government. income taxation and receives a majority of its support from the general public or the government. After review of the documentation delivered to us by the NAT and representations supplied by After review of the documentation delivered to us by the NAT and representations supplied by the NAT, we believe that the NAT is a "qualified organization." the NAT, we believe that the NAT is a "qualified organization." HF v,1 #11097/ /i W ;40 PM HP v,1 #11097/ /11/ ;40 PM

8 Legal 10:42:26 a.m / Legal 10:42:26 a.m /22 HERRICK, FINSTEIN IL? HERRICK, F11,18TEIN LL? Page 8 Page 8 (c) Conservation Purpose Among the delineated conservation purposes cited in Regulation Section 1.170A- 14(d)(5), is the preservation of "certified historic structures". A "certified historic structure" means any building, structure or land area that is listed in the National Register or is located in a registered historic district. However, even if a contribution is with respect to a certified historic structure, unless the contribution is protected in perpetuity, it will not meet the criteria set forth in the Regulations. Additionally, Regulation Section 1.170A-14(g)(2) provides that no deduction will be permitted to a taxpayer for the contribution of a facade conservation easement if the underlying property is subject to a mortgage and the mortgagee does not subordinate its rights in the property to the right of the qualified organization to enforce the conservation purpose of the gift. Any such subordination must also be in perpetuity. 4. Donative Intent. Code Section 170(c) states that in order to qualify for the charitable contribution deduction, a transfer from a taxpayer to a charitable recipient must constitute a contribution or gift. In U.S. v. American Bar Endowment, 477 U.S. 105, 118 (1986), the United States Supreme Court set forth the rule that, in general, a contribution or gift is a voluntary transfer of property without adequate consideration. In more recent years, the courts have applied a quid pro quo test in determining whether the donor received or expected to receive something in exchange for the donation. (o) Conservation Purpose Among the delineated conservation purposes cited in Regulation Section 1.170A- 14(d)(5), is the preservation of "certified historic structures". A "certified historic structure" means any building, structure or land area that is listed in the National Register or is located in a registered historic district. However, even if a contribution is with respect to a certified historic structure, unless the 'contribution is protected in perpetuity, it will not meet the criteria set forth in the Regulations. Additionally, Regulation Section 1.170A-14(g)(2) provides that no deduction will be permitted to a taxpayer for the contribution of a facade conservation casement if the underlying property is subject to a mortgage and the mortgagee does not subordinate its rights in the property to the right of the qualified organization to enforce the conservation purpose of the gift. Any such subordination must also be in perpetuity. 4. Donative Intent. Code Section 170(c) states that in order to qualify for the charitable contribution deduction, a transfer from a taxpayer to a charitable recipient must constitute a contribution or gift. In U.S. v. Aperican gar Endowment 477 U.S. 105, 118 (1986), the United States Supreme Court set forth the rule that, in general, a contribution or gift is a voluntary transfer of property without adequate consideration. In more recent years, the courts have applied a quid pro quo test in determining whether the donor received or expected to receive something in exchange for the donation. 1-1F v I 03/11/ ;40 I'M 1-IF v.1 #11097, /11/ :40 I'M

9 Legal 10:42:40 a'sn Legal 10:42:40 atm /22 HERRICTC., FEINSTEN LIP HERRICK., FEINSTEN LIP Page 9 Page 9 In Ackerman Buick. Inc. v. Comm'r, 32 T.C.M (1973), the tax court stated the established rule that a contribution made without any expectation of benefit, or one where the donor's benefit received is merely incidental or is indistinguishable from the benefit to the general community, is fully deductible, subject to the applicable percentage limitations and other restrictions imposed by Code Section However, a taxpayer's expectation of an income tax deduction does not negate his donative intent. In McLennan v. US, 91-I USTC (Ct. Cl. 1991), a taxpayer claimed a charitable contribution deduction for the grant of a scenic easement to a charity on its property. The IRS disallowed the deduction on the theory that the taxpayer lacked the necessary donative intent in granting the easement. In holding for the taxpayer and allowing the deduction, the court held that "the Code permits charitable deductions for bona fide gifts irrespective of a taxpayer's motivations." Adding to this statement, the court cited one of its prior decisions, Sheppard v. Ea,, 176 Ct. CI. 244 (1966) for the statement that, assuming there is no quid pro quo or substantial benefit transferred to the taxpayer by the donee, even if a taxpayer's exclusive purpose of making a charitable donation is to obtain a tax deduction, the taxpayer is still entitled to a deduction. In Ackerman Buick, Inc. v. Conun'r 32 T.C.M (1973), the tax court stated the established rule that a contribution made without any expectation of benefit, or one where the donor's benefit received is merely incidental or is indistinguishable from the benefit to the general community, is fully deductible, subject to the applicable percentage limitations and other restrictions imposed by Code Section However, a taxpayer's expectation of an income tax deduction does not negate his donative intent. in McLennan v. US, 91-1 USTC I (Ct. Cl. 1991), a taxpayer claimed a charitable contribution deduction for the grant of a scenic easement to a charity on its property. The MS disallowed the deduction on the theory that the taxpayer lacked the necessary donative intent in granting the easement. In holding for the taxpayer and allowing the deduction, the court held that "the Code permits charitable deductions for bona fide gifts irrespective of a taxpayer's motivations." Adding to this statement, the court cited one of its prior decisions, Sheppard v. US 176 Ct. Cl. 244 (1966) for the statement that, assuming there is no quid pro quo or substantial benefit transferred to the taxpayer by the done; even if a taxpayer's exclusive purpose of making a charitable donation is to obtain a tax deduction, the taxpayer is still entitled to a deduction_ In Schelftes v. Commissioner, 28 TCM 234 (1969)., the tax court stated that where the In Schefeces v. Commiss ' loner, 28 TCM 234 (1969), the tax court stated that where the structuring of a tramsaction in a form tending to support a deduction of a charitable contribution structuring of a tramsaetion in a form tending to support a deduction of a charitable contribution to be claimed in an amount greatly in excess of the cost of the property to be conveyed and to to be claimed in an amount greatly in excess of the cost of the property to be conveyed and to gain good will of county officials does not negate a charitable contribution deduction where the gain good will of county officials does not negate a charitable contribution deduction where the HF v.1 1t11097/000 03/11/ :40 PM HF v.1 1'11097/000I 03/1. 1/ :40 PM

10 Legal 10:42:56 a.m / Legal 10:42:56 a.m /22 Page 10 Page 10 decision to make the conveyance of a parcel of land to the board as a donation was not caused by decision to make the conveyance of a parcel of land to the board as a donation was not caused by any compulsion.. any compulsion. We have assumed that neither the Donor (nor any party related to the Donor) will receive We have assumed that neither the Donor (nor any party related to the Donor) will receive any benefit in return for the grant of the Easement to the NAT, other than the aforementioned tax any benefit in return for the grant of the Easement to the NAT, other than the aforementioned tax deduction. As such, the grant of the Easement should qualify as a valid charitable contribution: deduction. As such, the grant of the Easement should qualify as a valid charitable contribution: 5, Amount of Deduction. 5, Amount of Deduction. The amount of the deduction is equal to the difference in the fair market value of the The amount of the deduction is equal to the difference in the fair market value of the Property before the Easement was placed on the Property (the "Before Value") and the fair Property before the Easement was placed on the Property (the "Before Value") and the fair market value of the Property after the Easement is placed on the Property (the "After Value"). market value of die Property after the Easement is placed on the Property (the "After Value"). To the extent that the After Value would be equal to or exceed the Before Value there would be To the extent that the After Value would be equal to or exceed the Before Value there would be no deduction avullable. The valuation of the Before Value and the After Value, and the no deduction avullable. The valuation of the Before Value and the After Value, and the calculation of the net difference between the two will be made by the qualified appraiser and is calculation of the net difference between the two will be made by the qualified appraiser and is the amount the Donor should claim as its charitable contribution deduction. It should be noted the amount the Donor should claim as its charitable contribution deduction. It should be noted that the appraisal of the Before Value and the After Value is not binding on the IRS and is that the appraisal of the Before Value and the After Value is not binding on the IRS and is subject to review by the IRS. subject to review by the IRS. FIF v.1 #110971/ /11/ :40 PM HF v.1 #110971/ /1 I/ :40 PM

11 Legal 10:43:09 a.m / Legal 10:43:09 a.m /22 HERRICK, FEINSTEIN I,LP Page 11 March 31,2005 Page Limitations on Charitable Contributions. 6. Limitations on Charitable Contributions. Generally, deductions made to public charities are liraited 3 to fifty percent (50%) of the Generally, deductions made to public charities are limited to fifty percent (50%) of the donor's contribution base (an amount basically equal to the donor's adjusted gross income) for donor's contribution base (an amount basically equal to the donor's adjusted gross income) for the year in which the contribution is made, A contribution of appreciated property (other than the year in which the contribution is made, A contribution of appreciated property (other than cash) is limited to thirty percent (30%) of the donor's contribution base for the year in which the cash) is limited to thirty percent (30%) of the donor's contribution base for the year in which the contribution is made. A donation of the Easement (since it is a contribution of appreciated contribution is made. A donation of the Easement (since it is a contribution of appreciated property) to the NAT is, therefore, limited to thirty percent (30%) of the Donor's contribution property) to the NAT is, therefore, limited to thirty percent (30%) of the Donor's contribution base for the year in which the contribution is made. base for the year in which the contribution is made. To the extent that a donor's charitable contributions exceeds the applicable limitation To the extent that a donor's charitable contributions exceeds the applicable limitation percentage (described above) multiplied by his contribution base for the year in which the percentage (described above) multiplied by his contribution base for the year in which the donation is made, the taxpayer can can", forward such excess contribution to the next five (5) donation is made, the taxpayer can carry forward such excess contribution to the next five (5) taxable years. Ho wever, the carryover amount, when added to any other donations made in a taxable years. Ho wever, the carryover amount, when added to any other donations made in a subsequent year during the five (5) year carryforward period, will be subject to the same subsequent year during the five (5) year carryforward period, will be subject to the same limitation percentage in each of those years, as well. limitation percentage in each of those years, as well. 3 It should be noted that itemized deductions (e.g., charitable contributions), in general, are subject to their own limitations. 3 It should be noted that itemized deductions (e.g., charitable contributions), in general, are subject to their own limitations. HF S33010 v.1 fit 1097/ /11/ :40 PM HF v.1 g11097/040103/1 1/ :40 PM

12 Legal 10:43:22 a.m Legal 10:43:22 a.m Page 12 Page Timing of Deduction 7. Timing of Deduction NY RPL Article 8 Section 243 provides that a grant takes place only upon delivery. NY RPL Article 8 Section 243 provides that a grant takes place only upon delivery. Thus, the delivery of the Easement and not the recording of the Easement controls when the Thus, the delivery of the Easement and not the recording of the Easement controls when the Easement is etteotive, Easement is effective. 8. Conclusion. 8. Conclusion. Based on the facts and assumptions described above, and on a reasoned analysis of Based on the facts and assumptions described above, and on a reasoned analysis of Section 170 of the Code, the Regulations and other relevant authorities, it is our opinion that Section 170 of the Code, the Regulations and other relevant authorities, it is our opinion that your grant of the Easement to the NAT pursuant to the terms of the Relevant Documents should your grant of the Easement to the NAT pursuant to the terms of the Relevant Documents should constitute a qualified conservation contribution deduction which may (subject to certain constitute a qualified conservation contribution deduction which may (subject to certain limitations contained in the Code) be claimed by the Donor. limitations contained in the Code) be claimed by the Donor. No opinion is expressed as to any transaction other than the grant of the Easement to the No opinion is expressed as to any transaction other than the grant of the Easement to the NAT, To the extent any of the assumptions of our opinion are not complete, correct, true or NAT, To the extent any of the assumptions of our opinion are not complete, correct, true or accurate in all respects at all relevant times, our opinion could be adversely affected and should accurate in all respects at all relevant times, our opinion could be adversely affected and should not be relied upon. not be relied upon. This opinion represents only our best judgment as to the federal income tax Status of the This opinion represents only our best judgment as to the federal income tax Status of the donation, and is not binding on the IRS or the courts. It is possible that future legislative, donation, and is not binding on the IRS or the courts. It is possible that future legislative, judicial or administrative changes could alter the tax treatment of the donation, and that such judicial or administrative changes could alter the tax treatment of the donation, and that such changes could be retroactive and affect the validity of the conclusions stated herein. We do not changes could be retroactive and affect the validity of the conclusions stated herein. We do not HF v- 1 #11097/ /11/ :40 PM HF v.1 #11097/ /11/ :40 PM

13 Legal 10:43:35 a.m / Legal 10:43:35 a.m HER.RICK., HER.RICK, FEINSTEIN LLP Page 13 undertake any responsibility to advise you of any new developments in in the application or interpretation of the federal income tax laws. This opinion may not be relied upon by, and is not deemed made in favor of; any donor that holds the Property as inventory* inventory, Such a donor could be deemed a a "dealer" and different tax rules will apply. This opinion may not be distributed or made available by you to to any other person, or or relied on by any other person or entity without our prior written consent. Very truly yours, Herrick, Feinstein LLP HF RF v.1 # /11/ :40 PM