Question: Charitable Gift of Property Subject to a Condition, Writing a Memorandum to the Client's File
Facts: Your clients, Justin and Kim Horton, recently purchased oceanfront property in Wilmington, North Carolina. The Hortons paid $2.5 million dollars for the property. There is an existing, modest house on the property that was built in 1948. The Hortons purchased the property for the land (and oceanfront location) as opposed to the existing house. The Hortons would like to demolish the house and build a large, multi-million-dollar house on the property. Rather than paying a contractor $45,000 to demolish the existing house, the Hortons are considering donating the house (but not the land) the Wilmington Volunteer Fire Department ("WVFD") with the stipulation that the WVFD will quickly burn it down as part of its firefighter training program.
Required: Is there any authority indicating that Justin and Kim cannot claim a deduction for this donation? Research this question considering the relevant Code Section(s), regulation(s), cases and/or rulings and write a brief memorandum to the client's file that addresses this question.