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FUNDAMENTAL CONCEPTSthat the government was barred from challenging the ownership of the propertyin dispute, on the ground that the issue in a condemnation proceeding and the litigationin the case were identical. 135Underlying this matter was a dispute as to the location of a boundary linebetween a state park and property owned by the corporation. The first survey ofthe property had placed the line at one location; a subsequent survey had placedit elsewhere. A more contemporary survey confirmed that the first survey wascorrect. This line-shifting created a strip of property that was the parcel of landinvolved in the case. Eventually, to settle earlier disputes, the corporation executeda quitclaim deed to the state—and claimed a charitable deduction for thefair market value of the property. Applying the doctrine of collateral estoppel,the court found that the true property line had been established in prior litigation,seemingly adding the land to the corporation’s assets. Indeed, the governmentvigorously argued against application of the collateral estoppel rule.Over the years, however, the state and the corporation had acted as thoughthe property line were at the place established by the second survey. The statemaintained the park property, including the disputed parcel, and placed signsaround the park (and the property at issue) identifying all of it as park land.Based on these and other facts, the court concluded that the state had acquiredtitle to the property in dispute by virtue of the doctrine of adverse possession.Thus, although the corporation thought it owned this land at the time of theintended gift, the title, unknown to the corporation, had already shifted to thestate by operation of law. Therefore, the charitable deduction was denied, onthe basis of the fundamental principle that there cannot be a charitable contributiondeduction for a “gift” of property that the “donor” did not own at thetime of the transaction.Likewise, the IRS challenged a charitable contribution promotion programthat involved gifts of gravesites to charitable organizations; one of the bases ofthe challenge was that the “donors” never owned the contributed items. Theground for this contention was that the “donors” did not receive a formal deedto the property. This issue arose twice in 1993 in the U.S. Tax Court, with thecourt observing that state law controls on this issue 136 and that the states’ law onthe point did not require a deed for the legal transfer of a gravesite or cemeterylot. The court held that it was adequate, as a matter of “administrative efficiency,”to use a deed only for the transfer of the gravesites from the originalowners to the charitable donees. 137This aspect of the law is further illustrated from a different perspective. Forgivenessby the lender of a debt owed by a charitable organization can give riseto a charitable contribution deduction for that lender. For that to occur, however,there must be, in the eyes of the law, a valid, enforceable indebtedness to forgive.This principle was demonstrated in a court case in which the charitable deductionwas denied because the underlying obligation was legally deficient. 138135 Kamilche Co. v. United States, 53 F.3d 1059 (9th Cir. 1995).136 See, e.g., United States v. Mitchell, 403 U.S. 190, 197 (1971); Burner v. Harmel, 287 U.S. 103, 110 (1932).137 Klavan v. Commissioner, 66 T.C.M. (CCH) 68 (1993); Weiss v. Commissioner, 65 T.C.M. (CCH) 2768 (1993).138 Bond v. United States, 97-2 U.S.T.C. 50,868 (N.D. Ill. 1997). 76