D. State Licensing Laws Not Controlling The inclusion of surveying in the field of engineering is supported by the legislative history. Civil engineering is a branch of engineering, and land surveying falls within the ordinary meaning of engineering and historically is regarded as within the field of engineering. The fact that land surveying may be performed by an individual who is not a licensed engineer does not remove those services from the "field of engineering". See Rainbow Tax Serv., Inc. v. Commissioner, 128 T.C. at 46 (tax preparation and bookkeeping services are within the field of accounting even when performed by a corporation that employs no licensed C.P.A.'s). "The meaning of the words or the legal status of circumstances for federal tax purposes need not be identical to their meaning or their legal effect under state law.” Estate of Steffke v. Commissioner, 538 F.2d 730, 732 (7th Cir. 1976) (citing Commissioner v. Tower, 327 U.S. 280 (1946), and Lyeth v. Hoey, 305 U.S. 188 (1938). In interpreting a Federal taxing statute the Supreme Court said: Here we are concerned only with the meaning and application of a statute enacted by Congress, in the exercise of its plenary power under the Constitution, to tax income. The exertion of that power is not subject to state control. It is the will of Congress which controls, and the expression of its will in legislation, in the absence of language evidencing a different purpose, is to be interpreted so as to give a uniform application to a nation-wide scheme of taxation. * * * State law may control only when the federal taxing act, by express language or necessary implication, makes its own operation dependent upon state law.*** Burnet v. Harmel, 287 U.S. 103, 110 (1932); see also United States v. Pelzer, 312 U.S. 399, 402-403 (1941); Lyeth v. Hoey, supra at 194. Thus, the provisions of the revenue laws “are not to be taken as subject to state control or limitation unless the language or necessary implication of the section involved makes its application dependent on state law.'” United States v. Irvine, 511 U.S. 224, 239 (1994) (quoting United States v. Pelzer, supra at 402–403). We can find no basis in the text of section 448(d)(2) or its legislative history to conclude that Congress intended to condition the meaning of "services in the field of engineering" (or any other qualifying field) on State law. In NLRB v. Hearst Publns., Inc., 322 U.S. 111, 123 (1944), the Supreme Court rejected an argument that the term "employee" as used in a Federal statute should be defined by State law, explaining: Both the terms and the purposes of the statute, as well as the legislative history, show that Congress had in mind no *** patchwork plan * * *. *** Nothing in the statute's background, history, terms or purposes indicates its scope is to be limited by *** varying local conceptions, either statutory or judicial, or that it is to be administered in accordance with whatever different standards the respective states may see fit to adopt for the disposition of unrelated, local problems. Similarly, nothing in the backgrounds, histories, terms, or purposes of sections 11(b)(2) and 448(d)(2) indicates that they are to be administered in accordance with different licensing standards States may adopt. Because State licensing laws governing engineering (and other qualifying fields) differ from State to State, defining a qualifying field by State licensing laws would mean that conduct in one State might constitute the performance of services in a qualifying field, whereas identical conduct in a neighboring State would not. "Congress has given no indication it intended the criminality of official conduct under federal law to depend on geography.” United States v. Weyhrauch, 548 F.3d 1237, 1246 (9th Cir. 2008). Whether a service is performed in one of the qualifying fields under section 448(d)(2) is to be decided by all relevant indicia, including the text of the statute, its legislative history and regulations, application of the normal meaning of the term "health", "law", "engineering", "architecture”, "accounting", "actuarial science", "performing arts", or "consulting", and examination of services historically regarded as within the qualifying field. See Rainbow Tax Serv., Inc. v. Commissioner, 128 T.C. 42 (2007). VI. Conclusion We hold that section 1.448-1T(e)(4)(i), Temporary Income Tax Regs., supra, is a reasonable interpretation of the statute, supported by the legislative history; by the ordinary meaning of the word "engineering", which encompasses surveying; and by other indicia, that surveying is regarded as within the field of engineering. It implements the congres sional mandate in a reasonable manner and is not arbitrary, capricious, or manifestly contrary to the statute. Accordingly, it is valid under both Natl. Muffler Dealers Association v. United States, 440 U.S. 472 (1979), and Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984). 9 We hold further that petitioner's land surveying is within the field of civil engineering, which in turn is within the field of engineering, and that petitioner is a qualified personal service corporation defined in section 448(d)(2) and subject to the flat 35-percent income tax rate under section 11(b)(2). To reflect the foregoing, An appropriate order and decision for respondent will be entered. GORDON AND LORNA KAUFMAN, PETITIONERS v. RESPONDENT Docket No. 15997-09. Filed April 26, 2010. In 2003, Ps transferred a facade easement and cash to a qualified organization. With respect to the facade easement contribution, Ps claimed a charitable contribution deduction in 2003 and a corresponding carryover deduction in 2004; with respect to the cash contribution, Ps claimed a charitable contribution deduction in 2003. R disallowed the deductions, which led to deficiencies. R also determined accuracy-related penalties under sec. 6662, I.R.C. R has moved for summary judgment. Ps object. 1. Held: With respect to the facade easement contribution, Ps have failed to raise any genuine issue of material fact regarding their compliance with sec. 1.170A-14(g)(6)(ii), Income Tax Regs. Because the facade easement contribution fails to satisfy the requirement in that provision, the interest in property conveyed by the facade easement was not protected in perpetuity. Thus, the facade easement contribution was not a qualified conservation contribution under sec. 170(h), I.R.C., see sec. 170(h)(2)(C), (5)(A), I.R.C., and Ps are not entitled to any deduction therefor, see sec. 170(f)(3), I.R.C. 9 Under Natl. Muffler Dealers Association v. United States, 440 U.S. 472 (1979), an interpretative regulation is valid if it implements a congressional mandate in a reasonable manner. By contrast, under Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 844 (1984), a legislative regulation is upheld "unless arbitrary, capricious, or manifestly contrary to the statute". 2. Held, further, Ps have raised genuine issues of material fact with respect to the cash contribution and the accuracyrelated penalties under sec. 6662(a), I.R.C. Michael E. Mooney, Julie Pruitt Barry, and Eleanor E. Farwell, for petitioners. Carina J. Campobasso, for respondent. OPINION HALPERN, Judge: Respondent has determined deficiencies in, and penalties with respect to, petitioners' Federal income tax, as follows: 1 In 2003, petitioners contributed a facade easement and cash to the National Architectural Trust (NAT). With respect to the facade easement contribution, petitioners claimed a charitable contribution deduction in 2003 and a corresponding carryover deduction in 2004; with respect to the cash contribution, they claimed a charitable contribution deduction in 2003. Respondent disallowed those deductions, which led to the deficiencies. With respect to the portions of the underpayments of tax in 2003 and 2004 attributable to the facade easement contribution, respondent determined accuracy-related penalties of 40 percent for a gross valuation misstatement under section 6662(h); in the alternative, he determined accuracy-related penalties of 20 percent 2 for negligence, substantial understatement of income tax, and substantial valuation misstatement under section 6662(a). With respect to the portion of the underpayment of tax in 2003 attributable to the cash contribution, respondent determined an accuracy-related penalty of 20 percent for negligence and substantial understatement of income tax under section 6662(a). 1 Unless otherwise stated, section references are to the Internal Revenue Code in effect for the years in issue, and Rule references are to the Tax Court Rules of Practice and Procedure. We round all amounts to the nearest dollar. 2 That is, half the amounts under sec. 6662(h) in the table above. Respondent has moved for summary judgment (the motion). Petitioners object (the response). At our request, petitioners also filed a supplement to the response (the supplement). We shall grant the motion only with respect to the facade easement contribution. With respect to the cash contribution and the penalties, we shall deny the motion. Background At the time they filed the petition, petitioners lived in Massachusetts. The property here in question is a singlefamily rowhouse located in a historic preservation district in Boston. In December 2003, petitioners entered into a preservation restriction agreement (the agreement) with NAT pursuant to which petitioners granted to NAT a facade easement restricting the use of the property. NAT also required petitioners to make a cash contribution, calculated as a percentage of the estimated value of the facade easement, to provide for "monitoring and administration" of the facade easement. Later that month, petitioners contributed $16,840 to NAT, 3 and NAT accepted the agreement. At the time of the contributions, Washington Mutual Bank, FA (the bank), held a mortgage on the property. On their 2003 Federal income tax return, petitioners claimed a charitable contribution deduction of $220,800 for the contribution of the facade easement. Because of the limitations on charitable contribution deductions in section 170(b)(1)(C), petitioners claimed a charitable contribution deduction with respect to the facade easement of only $103,377. Petitioners also claimed a charitable contribution deduction of $16,870 for the cash contribution, notwithstanding that the cash contribution was only $16,840. On their 2004 Federal income tax return, petitioners claimed a carryover charitable contribution deduction of $117,423 related to the facade easement contribution. 3 Previously, in October 2003, as part of their preservation restriction agreement application, petitioners had made a $1,000 "good faith deposit". |