In Uncategorized on 08/28/2017 at 15:47

And The Footnote Says It All

No, Big River Development, L.P., Cork Factory LP, Tax Matters Partner, 2017 T. C. Memo. 166, filed 8/28/17, isn’t quoting Alfred, Lord Tennyson’s famous line “My strength is as the strength of ten, because my heart is pure.”

Whether or not their collective hearts are pure, ten is equal to one.

Because their deed of gift conveying the historic preservation easement for the Armstrong Cork Factory to the Pittsburgh History and Landmarks Foundation, though it mentions the infamous “Ten Dollars” that sunk poor Randy Schrimsher, has the merger clause, the Big River Gang wins.

Well, so did Randy’s deed have a merger clause, but Judge Michael B. (“Iron Mike”) Thornton brushed it aside back in 2011.

Today, Judge Lauber brushes aside the Ten Dollars, maybe because the Big River Gang’s deed only used initial capitals, rather than all caps (ya think?).

“Apart from the charitable conveyance and the covenants attending the easement, the deed of easement contains only two references to ‘consideration.’  The first is the granting provision’s reference to ‘consideration of Ten Dollars ($10.00) * * * [and] other good and valuable consideration.’  Neither party contends that PHLF actually furnished LP with any valuable goods or services in exchange for its gift.  Evaluating this clause in the context of the deed overall, we conclude that this clause constitutes ‘“boilerplate language and has no legal effect for purposes of sec. 170(f)(8).’” 310 Retail, LLC, T.C. Memo. 2017-164, at *17 (quoting RP Golf, LLC, 104 T.C.M. (CCH) at 416 n.7).” 2017 T. C. Memo. 166, at pp. 11-12. Footnote omitted, but it’s the whole point of this decision; see below.

The deed of gift also required the Big River Gang to pay PHLF $93K for monitoring compliance with the easement supporting historic preservation. IRS claimed that was “services.”

Judge Lauber gives a polite version of a Taishoff “Oh Please!”

“By inspecting the building to ensure compliance with the easement restrictions, PHLF would be discharging its own enforcement responsibilities as a charitable organization holding conservation easements.  Its monitoring would be an odd form of ‘service’ because it could generate no upside for LP but only downside.  If the monitoring disclosed a violation, the deed authorized PHLF to seek an injunction requiring LP to restore the property to the status quo ante and to demand reimbursement for any costs thus incurred. And because the easements held by PHLF are its property, any contribution to an ‘easement defense fund’ would seem to benefit it rather than its donors.” 2017 T. C. Memo. 166, at p. 12-13.

Howbeit, there was a statement of the value of the “services” if that’s what they are, so Section 170 was complied with.

Now for the big news here. Guess what case isn’t cited in this opinion? Why, Randall A. and Kelly C. Schrimsher, 2011 T. C. Memo. 71, filed 3/28/11.

And here’s the famous footnote: “We find no legally significant distinction between the boilerplate language of the granting provision in the instant case (which recited receipt of ‘Ten Dollars ($10.00) * * * and other good and valuable consideration’), in 310 Retail, LLC (which recited receipt of  ‘One Dollar ($1.00) and * * * other good and valuable consideration’), and in RP Golf, LLC (which recited receipt of  ‘other good and valuable consideration’ without mentioning a nominal dollar amount).” 2017 T. C. Memo. 166, at p. 12, Footnote 3.

So is Schrimsher overruled? Distinguished? Ignored?

Judge Lauber, I’d love to know the answer.


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