Ottawa Silica Co. v. United States
United States Court of Appeals for the Federal Circuit
699 F.2d 1124 (Fed. Cir. 1983)
Ottawa Silica Company (plaintiff), unable to use certain property for its silica-mining business, intended to sell it to residential developers; a local school district identified part of the property as an ideal high school site and, being tax-exempt, asked Ottawa to donate the parcel, which Ottawa did while also negotiating access-road locations for the school, and the new school and roads significantly increased the value of Ottawa's remaining land, which it then sold profitably to developers. Ottawa claimed a charitable tax deduction for the transferred land's value, but the tax commissioner denied it, finding Ottawa received a substantial benefit in exchange; Ottawa sued for a refund in the Court of Claims, lost, and appealed further.
Whether a land transfer to a tax-exempt entity qualifies as a deductible charitable gift when the donor expects, and in fact receives, a substantial financial benefit from the transfer in the form of increased value to its retained property.