Champions Retreat Golf Founders, LLC., Riverwood Land, LLC., Tax Matters Partner, 2018 T. C. Memo. 146, filed 9/10/18*, is more like a rout than a retreat, as Judge Pugh finds there weren’t enough “rare, endangered, or threatened species in the easement area to satisfy the conservation purpose requirement.” 2018 T. C, Memo. 146, at p. 24.

The aim is to preserve a significant relatively natural habitat for flora and fauna. “A significant relatively natural habitat can include but is not limited to ‘habitats for rare, endangered, or threatened species of animals, fish, or plants; * * * and natural areas which are included in, or which contribute to, the ecological viability of a local, state, or national park, nature preserve, wildlife refuge, wilderness area, or other similar conservation area.’  Sec. 1.170A-14(d)(3)(ii), Income Tax Regs.  Some human alteration of a significant relatively natural habitat will not result in the denial of a deduction, as long as ‘the fish, wildlife, or plants continue to exist there in a relatively natural state.’  Id. subdiv. (i).” 2018 T. C. Memo. 146, at p. 23.

Now it’s not necessary for a rare, endangered or threatened species to be covered by the Endangered Species Act of 1973, but the avian population at the Champions’ beaten-down golf course doesn’t make the cut. Only the brown-headed nuthatch is anywhere on the leaderboard.

The land-based fauna don’t fare a lot better. Only the southern fox squirrels are listed as “declining,” but they can’t be too far off the glidepath, because they can be legally hunted in GA.

The Champions might have a shot with the denseflower knotweed, but they show up in only 7.5% of the $10 million easement area, and anyway the Champions are trying to extirpate the same.

“Assuming that denseflower knotweed could flourish in both swaths of undisturbed bottomland forest in the easement area, its found suitable habitat would constitute less than 17% of the easement area.  Moreover, hole 4 on the Island course was designed to drain into the only swath of bottomland forest on the easement area in which the denseflower knotweed is found, introducing the chemicals used by Champions Retreat (albeit legally and in accordance with the easement)–including herbicides–into its habitat.  Less than 17% of the easement area is not enough to fulfill the conservation purpose of providing a significant relatively natural habitat.  See Atkinson v. Commissioner, at *35 (holding that a plant found on 24% of the easement area was ‘too insignificant’ to lead the Court to conclude that the easement area was a significant relatively natural habitat).” 2018 T. C. Memo. 146, at p. 27.

And visual space is limited to those who own houses around the golf course. Access to Little River, which meanders about the property, may not be open to the public: there was a kerfuffle, still unresolved, the Benderdinker row.

“The Benderdinker Festival–a community boating event held annually that included upwards of 800 people–also was held annually on the Savannah and Little Rivers, taking participants in a loop around Germain Island.  In 2013 there was a dispute over whether the Benderdinker Festival could use the Little River while Champions Retreat was hosting a golf tournament, which turned on whether the Little River was a public waterway or was privately owned by Champions Retreat. Champions Retreat eventually gave its permission, but whether the Little River is public or private remains unresolved.” 2018 T. C. Memo. 146, at p. 17.

No deduction.

Takeaway- Having only a nuthatch, a knotweed, a fox squirrel, and a busted Benderdinker, when you’ve got a $10 million deduction on the line, is the nearest thing to a Michael Corleone gambit I can think of.

*champions rtetreat golf 9 10 18