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Hat tip to johnk at Blue Mass Group for bringing this to my attention. I'm posting here so it's brought to yours.

Frank Phillips, the Boston Globe reporter who broke the story of Massachusetts GOP nominee for U.S. Senate Gabriel Gomez's historic conservation easement tax deduction, has more. As Phillips first reported and as discussed on Daily Kos last week, in 2004 Gomez bought a home in Cohasset Common Historic District in Cohasset, Massachusetts for $2.1 million. In 2005 Gomez granted a historic preservation easement to the DC-based National Architectural Trust (the "Trust") (which since has changed its name to "Trust for Historic Easements" because the National Trust for Historic Preservation didn't like the two being confused). Under the terms of the easement, Gomez promised that no changes would be made, ever (even after he sells), that would impair the historic character of the home's facade from the street.

The Gomez home in Cohasset
Homeowners are allowed to deduct, as a charitable contribution, the "value" of the easement thus donated. The most common formula is to take the difference between the value of the house before the easement is granted and the value of the house after. The home's value often goes down when such an easement is granted because potential buyers won't like being subject to the restrictions in the easement. In Gomez's case, however, the easement does not appear to have created any restrictions that were not already in place under the rules of the historic district. As the IRS says:
It is possible that the grant of an easement will have no significant effect on the value of the property, particularly if the easement is not more restrictive than local ordinances already in effect.
In other words, if your house did not go down in value from placing these restrictions on it, because your house already was subject to these restrictions, you've got no business taking a big tax deduction. Because the potential for abuse is so great, the IRS in 2005 (the year Gomez took the deduction) listed this deduction among its "Dirty Dozen" tax scams. In 2011 the IRS sued the Trust for aiding and abetting tax evasion. At that time, the IRS had completed audits of 51 homeowners who claimed this deduction because of easements granted to the Trust, and had rejected the deduction in 70% of cases. The suit (which the organization settled without admitting wrongdoing - a hallmark of the Obama/Holder DOJ) alleged that the Trust routinely advised homeowners that, under IRS policy, they could claim a deduction of 10% to 15% of the home's pre-easement value. The IRS insists no such policy existed.

After receiving some harsh criticism from local journalists one would expect to be friendly, I'm sure Gomez was hoping the story would just go away. Doesn't look like it; now the plot thickens...

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Phillips's story in today's Boston Globe reports that Gomez hired appraiser Shaun Fitzgerald in 2005 (the IRS requires an appraisal when claiming this deduction). Fitzgerald, a former president of the Massachusetts Board of Real Estate Appraisers, says he was referred by the Trust. He prepared a report justifying a tax deduction of $245,640 and submitted it with a bill for $1,000.

According to Fitzgerald (who filed a small claims court suit this week but is probably barred by the statute of limitations), Gomez never paid the bill. In his complaint Fitzgerald alleges that Gomez declined to pay because the appraisal “was not properly prepared and...the value of the easement at $245,640 was inadequate.” Seems like Gomez was really fishing for the maximum tax deduction he could get away with. As we now know, Gomez found a different appraiser who wrote a report justifying a deduction $35,000 larger, and claimed $281,500 on his taxes. Fitzgerald said he didn't know until the story came out last week that Gomez had in fact claimed the deduction.

The Cohasset Common Historic District in Cohasset, Massachusetts
Frankly, even Fitzgerald's assessment seems fishy to me. Thus far no evidence has surfaced - other than assessments by people referred by the Trust - indicating that Gomez's house went down one penny in value as a result of this easement. The house is assessed at several hundred thousand dollars more now than it was in 2005, and at no time did Gomez petition Cohasset for a reduction in property tax assessment. The argument in favor of the deduction generally is that the easement is more restrictive than the historic district regulations because the town might eliminate its regulations at some future date. It seems more likely to me that a trust described as a clearinghouse for tax evasion would fail to enforce its easement than that the Town of Cohasset would abolish a historic district right in the center of town.
Second Congregational Church and Cohasset Town Hall in the Cohasset Common Historic District
Cohasset Common and the 1747 First Parish (Unitarian Universalist)
There's more. The whole point of the easement and the historic district rules is to prevent changes to the facade that alter the historic character of the house. But in 2006, a year after taking a $281,500 income tax deduction for promising not to change the appearance of his house, Gomez...changed the appearance of his house. He removed one of the two brick chimneys. The Trust, which had called the chimneys “important character-defining elements’’ of the house in its August 2005 survey, signed off. So much for strict enforcement there. The Historic Commission didn't raise a peep either on the theory that the chimney was not sufficiently visible from the street. Of course, Gomez's wife sits on the Historic Commission.

Gomez, meanwhile, is refusing to release his 2005 tax returns (he released 2006 through 2012) on the theory that he has "nothing to hide." Where I come from (which is a place where Gomez is seeking votes right now), having nothing to hide is an argument for disclosure.

This guy is not worthy to join Elizabeth Warren in the United States Senate. Let's get Ed Markey - a true progressive - elected on June 25.

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Originally posted to fenway49 on Thu May 16, 2013 at 07:22 AM PDT.

Also republished by Massachusetts Kosmopolitans and Community Spotlight.

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