Lawrence Mann v. United States, 984 F.3d 317

Background

Linda Mann bought 5300 Moorland Lane (Bethesda, MD) in 2011; she and her husband decided to demolish the existing house and build new.
Linda signed a written donation agreement (Dec. 1, 2011) conveying “all of [her] right, title and interest” in the house (but not the land) to Second Chance, a §501(c)(3) that performs deconstruction training and salvages materials.
No deed or other instrument transferring title to the improvements was recorded; Second Chance salvaged some materials, destroyed others as part of training, and left the rest for demolition by the Manns’ contractor.
The Manns claimed a $675,000 charitable deduction (based on an appraisal treating the intact house as movable) and later amended for $313,353 (an appraisal valuing all building components by a cost approach); IRS disallowed the house deductions after audit.
The district court granted summary judgment for the government: (1) Manns did not sever/transfer their entire interest in the house under §170(f)(3) because title remained of record with Linda, and (2) the $313,353 appraisal was not a qualified appraisal of the contributed property because it assumed donation of all components.
The Fourth Circuit affirmed on those grounds; it upheld denial of the house deduction and sustained the district court’s appraisal ruling.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Manns severed and donated their entire interest in the house (26 U.S.C. §170(f)(3))	The written donation agreement constructively severed the improvements from the land and conveyed the entire house to Second Chance; recordation not required.	No record deed was recorded; record ownership (and tax incidents) remained with Linda; in substance only a right to salvage/use was conveyed.	Court: No severance affecting record title; Manns did not convey their entire interest; deduction disallowed under §170(f)(3).
Whether constructive severance alone suffices to defeat record-title presumption	Manns: contractual severance (statute of frauds-satisfying writing) is enough to convert improvements to personalty for donation.	Gov’t: Maryland law treats improvements as part of real property; without a recorded instrument record title (and tax liability) stays with landowner.	Court: Contractual/constructive severance does not change record title for real-property tax/ownership purposes absent recording; Manns remained record owner.
Whether the $313,353 appraisal was a "qualified appraisal" of the contributed property (26 U.S.C. §170(f)(11)(C))	Appraisal valued all building components (cost approach, depreciation) and thus properly measured the donation’s value.	Appraisal improperly valued components that were not donated or were destroyed; it did not value only the property actually transferred or provide substantiation.	Court: Appraisal flawed and not a qualified appraisal of the contributed property; it overstated value because not all components were donated.

Key Cases Cited

Supervisor of Assessments of Balt. Cnty. v. Greater Balt. Med. Ctr., 32 A.3d 174 (Md. Ct. Spec. App. 2011) (record landowner remains owner of improvements absent a recorded transfer).
Townsend Balt. Garage, LLC v. Supervisor of Assessments of Balt. City, 79 A.3d 960 (Md. Ct. Spec. App. 2013) (applies GBMC principle: record title controls for tax purposes without recorded transfer).
Walker v. Schindel, 58 Md. 360 (Md. 1882) (recognizes constructive severance doctrine by agreement of parties).
W. Va. N. R.R. Co. v. Comm’r, 282 F.2d 63 (4th Cir. 1960) (federal tax consequences determined by substance over form).
Comm’r v. Ct. Holding Co., 324 U.S. 331 (U.S. 1945) (transaction must be viewed in substance; form cannot defeat tax law).
Rolfs v. Comm’r, 668 F.3d 888 (7th Cir. 2012) (disallowing deduction where donated structure was destroyed for training and none of the house-as-house value was given away).