You probably won’t win a Rule 161 reconsideration either. That’s Judge Vasquez’s lesson for B.V. Belk, Jr., and Harriet C. Belk, in 2013 T. C. Memo. 154, filed 6/19/13.

Y’all remember B. V. and Miz Harriet? No? Well, see my blogpost “A Thing Of Beauty – Accept No Substitutes”, 1/28/13, wherein I discussed B. V.’s and Miz Harriet’s North Carolina golf course scenic easement, which included a mix-and-match clause. Judge Vasquez upheld IRS’ denial of the $10 million deduction because of the mix-and-match (the donors could swap other properties for the donated property subject to the not-unreasonably-withheld consent of the donee), but B. V. and Miz Harriet want to give it another shot.

But first, the obligatory incantation: ““Reconsideration is not the appropriate forum for rehashing previously rejected legal arguments or tendering new legal theories to reach the end result desired by the moving party.’ Estate of Quick v. Commissioner, 110 T.C. at 441-442.” 2013 T. C. Memo. 154, at p. 6.

B. V. and Miz Harriet argue that Section 170(h)(2)(C) only requires they donate some property, not which specific property. Wrong, says Judge Vasquez, there are no floating easements. The donation of a partial interest (the scenic easement) splits the property into two pieces, namely, the donated and the retained. “Petitioners’ interpretation of the statute would allow the donated portion (i.e., the easement) to encumber any piece of property; it could be the retained portion or another piece of property that the taxpayer owns. This is inconsistent with the taxpayer taking a charitable deduction for giving up part of his or her property (i.e., a partial interest). If the donated portion does not restrict the use of the retained portion, then the taxpayer has retained 100% of the economic value of the property for which he or she is taking a deduction.” 2013 T. C. Memo. 154, at p. 8.

Next, B. V. and Miz Harriet says North Carolina law allows parties to modify contracts by mutual consent, and since the easement document provides for amendment, Tax Court should apply State law here. In support of their position, they cite two PLRs. But of course PLRs have no precedential value for anyone but the taxpayer who obtained them.

And in any case those PLRs permitted limited modifications to the existing servient estate (as the high-priced lawyers call the land burdened by the easement), not a swap meet.

Anyway. since when does State law trump the IRC?

B. V. and Miz Harriet argue they intended to create a scenic easement, and that should control. But Judge Vasquez says he can’t ignore the plain words of the easement that allowed for the mix-and-match.

Judge Vasquez: “It is inappropriate for the Court to ignore provisions included in the conservation easement agreement simply because petitioners planned to deduct the value of the conservation easement agreement. Our interpretation of the parties’ intention is governed by what the parties actually included in the conservation easement agreement. It is well settled that a taxpayer’s expectations and hopes as to the tax treatment of his conduct in themselves are not determinative….” 2013 T. C. Memo. 154, at p. 12. (Citations omitted).

Finally, B. V. and Miz Harriet claim that Tax Court has failed to trust the donee (the charitable organization which can enforce the easement) to protect the scenic easement. No, says Judge Vasquez, because even though any dominant tenant (the one who benefits from an easement, if you went to an expensive law school) can refrain from enforcing its legal rights, either by choice or neglect, that’s nothing to the point when you explicitly provide for a loophole like the swap meet provision in your easement agreement.

In short, B. V. and Miz Harriet, if at first you don’t succeed in Tax Court, pay for the appeal; don’t waste time with reconsiderations.